Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2016 — House of Lords, 2016-05-05
Topic: Housing
Nicholas Bourne (Conservative, Centre-right): My Lords, these regulations will make a minor amendment to the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, postponing the date by which the Secretary of State must establish the private rented sector minimum standards exemptions register. I will first give some background on the private rented sector and the 2015 energy efficiency regulations, before discussing the specific effect of this amendment There are around 1.2 million non-domestic rental properties in England and Wales, making up approximately two-thirds of the non-domestic property market. Around one in five of these non-domestic properties falls within the lowest two energy efficiency bands—namely, the F and G energy performance certificate ratings. In the domestic sector, there are around 4.6 million privately rented properties in England and Wales, making it the second-largest tenure after owner-occupation, at around one-fifth of the total domestic housing stock. Up to 10% of properties in the domestic privately rented sector have an F or G energy performance certificate rating The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, when they bite, will drive improvements in the least energy-efficient privately rented properties across the domestic and the non-domestic sectors. They will do this by requiring landlords of F and G rated properties to improve those properties to a minimum energy efficiency rating of E if they wish to relet them after 1 April 2018. By targeting these worst-performing properties, the minimum standards regulations will improve the living and working conditions of tenants, many of whom—principally those in the domestic sector—are among the most vulnerable. By reducing the winter peak demand, the regulations, particularly the non-domestic provisions, will also help improve the UK’s energy security. However, the minimum standards regulations recognise that there will be instances where it will not be cost effective, or indeed practical, to improve particular properties. Therefore, a number of temporary exemptions are provided to protect landlords. For example, landlords will not be required to improve a property to an E rating where planning consent is required and cannot be obtained. Landlords will also be exempt where there is independent evidence that installation of a recommended measure would damage the fabric of their property or reduce its value by more than 5% In the non-domestic sector, landlords will be required to install only those measures that cost the same as, or less than, their expected energy savings over a seven-year period and will be eligible for an exemption if the improvements do not meet that payback test. Similar cost-effectiveness tests exist for the domestic sector, which I will discuss further in a moment In all cases where a valid exemption applies, the regulations will require the landlord to register that exemption on a centrally held register, the exemptions register, which my department is required to establish for this specific purpose. The minimum standards regulations give 1 October 2016 as the date on which the register must open. This is a full 18 months before the minimum standards come into force—in other words, 18 months after 1 October 2016, on 1 April 2018. That date will remain the same after these regulations amend the primary regulations in the 2015 set We are now seeking to amend that date for two reasons. First, the establishment of the register, while not a significant technology undertaking, will require time to design, build, and user test with landlord groups and local authorities and local weights and measures authorities, which will enforce the minimum standards. Given that a majority of landlords are unlikely to seek to register an exemption until much closer to the date at which the minimum standards come into force, because the five years will run from the registration rather than the date of the regulations coming into force, we believe that postponing the launch of the register by six months until 1 April 2017, will provide us with reasonable extra time to fully user test the database, without negatively affecting landlords’ plans to register a valid exemption Separate to this, we wish to postpone domestic landlords’ access to the register for a further six months, until October 2017. I noted a moment ago that the minimum standards regulations contain a cost-effectiveness test for domestic landlords. This provides a five-year exemption for landlords where they are unable to undertake improvements without up-front cost, specifically when measures cannot be wholly financed, at no cost to the landlord, with funding from central government, a local authority or any other source Noble Lords will be aware that, since mid-2015, the Green Deal Finance Company has not been funding any new Green Deal plans. While obligated energy company funding will continue to be available after 2018, and while local authority grants may continue to be available in specific areas, the current absence of Green Deal finance leaves a gap in the operation of the regulations as currently structured. We are clear that this should not be allowed to affect the delivery of the minimum standards adversely, and are working with the sector to determine what amendments we need to make to the scheme rules to allow the domestic standards to work. Invariably this work will take time, both to agree policy and to consult effectively on any proposed amendments. In the mean time, it would not be sensible to allow landlords to register five-year exemptions on the basis of a lack of Green Deal finance, which would risk significantly reducing the impact of the regulations over that period. By postponing domestic landlord access to the register until October 2017, we are ensuring that we will be able to consult fully and make any amendments which may be necessary before landlords can begin to register valid exemptions In conclusion, these amendments seek to postpone the launch of the private rented sector exemptions register by six months to April 2017, with an additional postponement for domestic landlords until October 2017. The amendments are being made for both technical and policy reasons and, while minor in themselves, will help to ensure that the minimum standard operates effectively, in line with its original intention—that is, to deliver significant improvements to the energy efficiency of the least energy-efficient properties in the private rented sector. I beg to move.