Greater Manchester's response to the consultation introduced by Salford Mayor Paul Dennett and Trafford Leader Cllr Andrew Western
Tuesday 22 December 2020
Dear Consultation Team,
BEIS Consultation: Improving the energy performance of privately rented homes
We are writing on behalf of Greater Manchester Combined Authority (GMCA) as GM Portfolio Lead for Housing, Homelessness and Infrastructure and GM Portfolio Lead for Green City Region. We enclose our detailed response to your consultation on improving the energy performance of privately rented homes.
In Greater Manchester, we have declared a climate emergency and have set ambitious targets of a carbon neutral city region by 2038, 12 years ahead of national targets. To achieve this, we must tackle the residential component of carbon emissions, of which the private rented sector (PRS) is an increasingly important part.
Our 5-Year Environment Plan for Greater Manchester sets out a step-change in improving the energy efficiency of homes across the city region, which includes urgently reducing the energy demands of our homes.
In our Greater Manchester Housing Strategy we also commit to priorities for safe, decent and affordable housing. This includes helping to make a positive impact on the lives of private tenants, as well as identifying pathways to volume domestic retrofit and reducing fuel poverty. We therefore welcome the opportunity to respond to this consultation and fully back proposals to support an energy performance upgrade in PRS homes.
This is especially important as private rented accommodation has become an increasingly important part of Greater Manchester’s housing supply. Over the last fifteen years the sector has become by far our fastest growing tenure - the last Census showed that between 2001 and 2011 the share of households living in privately rented homes rose from 11% to 17% (196,000 households) - the information we have indicates that this pattern of rapid growth has continued and is likely now to make up around 1 in 5 homes.
We also know that the range of accommodation the sector provides is growing too, from traditional segments like student living or temporary accommodation to meet urgent housing need, to an alternative for those unable to access social housing or to secure a mortgage. It also provides mid-market family housing and, increasingly, city centre apartments across a range of price levels. In short, it is a vital element of the housing market in our region and one that looks set to become ever more important to ever more people living or looking to live here. The sector therefore must be part of the solution to delivering net zero carbon homes.
The English Housing Survey suggests that nationally 25% of privately rented homes do not meet decency standards. Given the age profile of Greater Manchester’s housing stock and the significant concentrations of privately rented homes in older, terraced properties, it is reasonable to assume that conditions will be worse here than in many other parts of the country. Our analysis of all housing stock in Greater Manchester shows that around one third of homes have a high probability of having risks of excess cold, which brings with it concerns about tenants living in fuel poverty with inefficient energy supply.
This is worrying, given that around £5m a week is paid to private landlords through Housing Benefit/Universal Credit in Greater Manchester with no link made to property condition or to management standards. Parts of the sector are arguably operating in effect as social housing but without most of the access to additional services, support and regulatory safeguards a social tenant can expect to enjoy. We need greater influence over the welfare system in Greater Manchester, including piloting the linking of payments of Housing Benefit/housing element of Universal Credit to the condition of properties. The proposals should ensure that these payments are linked to minimum standards in the PRS, including energy performance of stock.
We need more ambitious controls in the private rented sector which set a minimum expected standard, both in terms of housing quality and comfort as well as energy efficiency and potentially, energy generation. Whilst we thoroughly welcome ambitions to improve the energy performance of privately rented homes, we need to move away from piecemeal national changes to a more strategic national approach which better protects tenants. The proposals in the consultation need opening up to address wider PRS issues.
In particular, the proposals to establish a PRS property compliance and exemption database are encouraging as this would be a vital tool to help enforce minimum energy efficiency standards. However, we’re clear that this should be broadened to a comprehensive landlord database, as with the Rent Smart Wales scheme, to allow local authorities access to a full register of PRS homes. This is a crucial missing element which would help enforce and regulate standards in the sector. It also supports the 2018 Rugg Review recommendation to introduce a combined national landlord and letting agent register.
We are concerned that the aims of the policy in this consultation are not fully clear and whether the focus is on addressing fuel poverty and thermal poverty or the energy performance of stock. These can be viewed as separate and often competing issues as improving the energy performance of housing will not necessarily lower fuel bills for tenants and could contribute to fuel poverty. For example, a heat pump will have similar or slightly higher fuel costs than a gas boiler whereas fabric measures such as insulation and PV installations will make homes cheaper to run and address fuel poverty. The recently published Energy White Paper commits to ensuring households in fuel poverty will not be left behind, and we look forward to the publication of the Fuel Poverty Strategy for England next year detailing how Government plans to transform the poorest quality housing, of which we expect the PRS to feature prominently.
Working together with the Greater Manchester Green City Partnership, we are exploring and exploiting any levers at our disposal to raise the standards in private homes, and integrating fuel poverty into our wider work with private landlords and owner occupiers.
However, we’re clear that our challenging carbon neutrality targets can only happen through a combination of sustained proactive national policy and aligned priorities and resources from Greater Manchester. New mechanisms to generate investments in energy efficiency and generation are needed in both new build and existing homes if the health, poverty and productivity impacts of inefficient stock are to be addressed. The recently announced Green Homes Grant are welcomed, but we need more stable, guaranteed long-term grant funding to provide longer-term solutions and strategic direction.
There needs to be a fundamental change to regulation of the PRS, which is set out by a national strategy and aligned interventions to support implementation. Resources in local authorities are stretched and, as the Rugg Review found, working to a national regulatory framework that is ‘confused and contradictory’. We need to find ways to boost the capacity available to enforce and to help raise standards in the private sector. Whilst the proposals in this consultation are welcomed, we fear that they will add another dimension to the already complicated regulatory landscape.
Paul Dennett, Salford City Mayor
GMCA Portfolio Lead – Housing, Homelessness and Infrastructure
Councillor Andrew Western, Leader of Trafford Council
GMCA Portfolio Lead – Green City Region
GMCA submission to the BEIS consultation on improving the energy performance of privately rented homes
Question 1: We would welcome views on possible impacts of the policy on the size of the PRS sector, the effect this could have on vulnerable households, and suggestions to mitigate this effect where it does occur, including any evidence.
- There are concerns that the proposals may lead to landlords exiting the market, and repurposing their properties as AirBnB or holiday lets, as a way to
bypass regulations. This could impact on supply for lower income households. Requirements for changes of planning use to create AirBnB, holiday lets and
PRS properties (from owner-occupation) could be introduced to mitigate this and to provide more oversight and control over areas.
- The proposals could potentially lead to a two-tier PRS market, with a ‘hidden’ non-compliant market. This would make enforcement activity and the adequate funding of this increasingly important.
Question 2: Do you foresee any impacts for protected groups? Please provide evidence to support your answer.
- People with protected characteristics, including Black and Minority Ethnic groups, are more likely to live in poorer and privately rented accommodation and so will be disproportionately impacted by the changes, with greater requirements for works expected on their properties.
- The proposals are more likely to impact on younger people, as the majority of renters are aged 35 or under in Greater Manchester.
Question 3: We would welcome views on any possible long-term impacts of COVID-19 that could impact on making the required energy efficiency improvements from April 2025 and suggestions to mitigate this effect where it does occur, including any evidence.
- COVID-19 could limit access to properties for works.
- The pandemic has exacerbated housing quality issues and make these proposals more critical. The comfort of the home and impact of cold homes is increasingly important, with more people isolating and working from home.
- Anticipate more landlords exiting the private rented sector due to COVID-19 and the impact of rent arrears and the evictions ban.
Question 4: Do you agree with the government’s preferred new target of EER C as a minimum energy performance standard in the PRS?
- Welcome low carbon ambitions for sector. Greater Manchester has set ambitious targets for a carbon neutral city region by 2038 (12 years ahead of
national targets). To achieve this, the residential component of carbon emissions must be tackled, of which the PRS is an increasingly important
- EER C should be seen as a stepping stone to more ambitious future targets, but would offer an appropriate transition period on the journey to low carbon PRS stock.
- The proposals must link to the review of HHSRS (which must include hazards relating to low carbon, CO2 production), and align with the Decent Homes Standard 2, which is expected to look at energy efficiency to ensure parity across all of the rented sector.
- There must be an element of Government grant funding to support landlords in meeting EER C.
- There are some concerns that EER C would merely address the energy performance of the property rather than tackling fuel poverty for tenants. For example, air source heat pumps are low carbon but can, in some circumstance, result in higher energy bills.
Question 5: We would welcome your views on the pros and cons of these alternative metrics, in relation to our overall policy goals around reducing carbon emissions, fuel poverty, and energy bills; please provide evidence with your answer.
- Agree that it is important not to delay implementation of the proposals and alternative approaches would take time to implement.
- It is important that approaches incorporate the occupancy of the building and so the impact on the tenant and fuel poverty is taken into account.
- Approaches also need to consider all methods of improving SAP/reducing CO2 emissions, for example creating a building regulations update to require
the installation of solar when new roofs are installed.
- Recent modelling for Greater Manchester housing stock shows a ‘deep’ fabric first approach is expensive and will not necessarily achieve net zero carbon in
domestic buildings without huge grant investment from Government.
Question 6: Do you agree with the government’s preferred policy scenario of requiring ‘new tenancies’ to reach EER C from 1 April 2025 and ‘all tenancies’ to reach EER C by 1 April 2028? If not, do you have alternative suggestions; please provide evidence with your answer.
- This seems reasonable and offers adequate time for a transitional period for landlords.
Question 7: Do you agree with increasing the cost cap to £10,000 inclusive of VAT as our preferred policy proposal? If not, please explain why not and provide evidence with your answer.
- Support increasing the cap to £10,000 inclusive of VAT as the current £3,500 cap is not feasible for many/most appropriate retrofit works, and could be used to avoid completing the works.
- However, having a blanket £10,000 cap for all takes no account of property size/rental income and it would be useful to differentiate this.
- In addition, there are occasions when the most appropriate retrofit solution could exceed £10,000 (e.g. when installing heat pumps in combination with
Solar PV) to achieve both carbon reduction and alleviation of fuel poverty goals. In these instances, mechanisms to facilitate the financing of additional
costs should be explored.
Question 8: Should the £10,000 cost cap be adjusted for inflation?
Question 9: Should a requirement for landlords to install fabric insulation measures first be introduced? If yes, when, and how should such a requirement be implemented? If no, what are the alternative installation methods that maximise energy efficiency outcomes? Please provide evidence to support your answer.
- This depends on Government priorities. It is important to understand the aims of the policy – whether it is to address fuel poverty and thermal poverty or the energy performance of stock. These can be viewed as separate issues.
- It is important to have a balance between the two approaches. Fabric measures will generally support tackling fuel poverty. However, recent modelling conducted in Greater Manchester shows large-scale expensive (deep) fabric measures will not necessarily achieve net zero carbon in domestic buildings without huge grant investment from Government.
- An approach which mirrors the Green Homes Grant Local Authority Delivery scheme (Phase 1b) criteria may provide the best solution, with an emphasis
on measures that reduce CO2 emissions and improve SAP. The fabric first approach, within reason, may be appropriate if followed by measures that focus on net CO2 production such as heat pumps/solar.
Question 10: We would welcome views on the alternative of a dual metric target to reach both EER Band C cost metric and also EIR B and C carbon metric, with an increased cost cap of £15,000 inclusive of VAT.
- Sensible to increase the cost cap. This would be an important tool to help incentivise landlords, whilst offering better savings for tenants.
Question 11: Should government introduce an affordability exemption? If so, we would welcome views on how such an exemption should be designed and evidenced, and any potential impacts on the PRS market.
- No – all landlords should have a duty to maintain property.
Question 12: What should the eligibility criteria be for an affordability exemption if it is introduced, and how can the criteria accommodate fluctuations in a landlord’s finances and/or in the value of a property? Please provide evidence to support your answer.
- Do not support the affordability exemption, as the cost cap already offers safeguard for landlords. There is also a long lead in period and transitional arrangements for the proposals.
- There are potential administration burdens if an affordability exemption was put in place, due to the expected complications on assessing exemptions.
Question 13: Should we incorporate TrustMark into energy performance improvement works? If not, please explain why not and provide evidence with your answer.
- TrustMark would offer the benefits of guaranteeing standards. However there are problems with endorsing just TrustMark. Many landlords undertake work themselves and could perceive this as too onerous and prescriptive and increase costs.
- There are also insufficient TrustMark contractors in some areas at this time.
Question 14: What role can the private rented sector play in supporting the rollout of smart meters and what are the barriers and possible solutions to achieving this?
- The PRS is an increasing tenure so must support the rollout of smart meters.
- To support the policy, landlords should not be able to refuse installation of a meter. Tenants should also have the choice over supplier and landlords should not be able to interfere with this.
- Potential barriers include landlord reluctance which could be mitigated by having solution regulations in place to ensure they cannot refuse the installation of meters in properties.
- There needs to be greater understanding of the benefits of smart meters to both landlords and tenants.
Question 15: We would welcome views on whether the PRS Regulations may need to be tightened further for the 2030s? Please provide evidence with your answer.
- Yes – will need to be tightened further and accelerated earlier to support the Greater Manchester target of a carbon neutral carbon city-region by 2038.
Question 16: What are the other steps government could take to increase awareness and understanding of the PRS Regulations?
- Better guidance for landlords in one consistent place – simplifying complicated legislative framework.
- Better guidance for practitioners.
- Engagement with mortgage providers.
- Engagement with Management Agents and landlord bodies.
- Taking advantage of touchpoints with landlords – recognising they are hard to reach groups.
- Linking housing standards and compliance with PRS Regulations with payments of Housing Benefit/housing element of Universal Credit.
Question 17: Is the introduction of a PRS property compliance and exemptions database necessary to help local authorities to proactively enforce minimum energy efficiency standards? If yes, should we include the per-property registration fee within the cost cap? If not, what alternatives to a PRS property compliance and exemption database would you suggest?
- Fully support the introduction of a property database as this is required to be able to identify PRS properties, and ensure compliance.
- Should use the opportunity to move away from piecemeal changes in PRS legislation and take a more strategic approach to managing the sector and adopt a more wide-ranging and comprehensive landlord registration system, as currently used in Wales.
- £30 is modest amount for the registration fee, so does not need to be incorporated in cost cap.
Question 18: Do you agree that government should set a maximum total registration fee for landlords with a very large portfolio? If yes, how many properties should qualify as a “very large” portfolio? What should the maximum fee be? If you do not agree to a maximum total registration fee proposal, do you have alternative suggestions?
- If £30 is considered reasonable, there is no discount needed. Landlords with a larger portfolio will be thus earning more income from their assets.
- Need to ensure all costs are covered, and it is cost neutral.
- Acknowledge that some distinction of portfolio size might be helpful, but the registration must be per property rather than per landlord. There is some
distinction in place for HMO Licensing, where discretionary or reduced prices are available for subsequent licences, or early registration discount.
Question 19: Should government seek primary powers to place a requirement on letting agents and online property platforms to only advertise and let properties compliant with the PRS Regulations? If not, please explain why not and provide evidence with your answer.
Question 20: Should government remove the seven to twenty-one day exemption period on landlords making all reasonable efforts to provide a valid EPC prior to a property being marketed or let? If not, please explain why not and provide evidence with your answer.
- Yes, all properties should be fully compliant before they are marketed and any tenancy created.
Question 21: Should government increase the level of the fixed civil penalty fine for offences under the EPB Regulations (currently set at £200)? If yes, how high should the fine be?
- Yes, this should match the £30,000 maximum limit for Civil Penalties. £200 is not a suitable deterrent and unlikely local authorities would enforce for such a
- No rent should be payable where offences are identified and Rent Repayment Orders could be used as a redress mechanism.
Question 22: Should government enable LAs to inspect properties for PRS compliance? If not, please explain why not and provide evidence with your answer.
- Yes, although there is already confused regulatory landscape for the PRS. The Housing Act 2004 allows entry into any property, but barriers can compromise this.
Question 23: Should government permit local authorities to use EPC Open Data for some phases of PRS enforcement? Please provide evidence with your answer.
- Yes, this would provide evidence-based enforcement to address HHSRS Excess Cold Hazards and concerns.
- Practitioners currently use EPC data from Landmark Information to inform enforcement activity.
- There may be data protection considerations, however landlord information should be made available to local authorities. Without it, enforcement would be much more labour intensive and costly to the public purse.
Question 24: Should there be a requirement for post-improvement EPCs (and for the cost to be included within the cost cap)?
- Yes, this would validate compliance.
Question 25: Should a valid EPC be in place at all times while a property is let?
Question 26: How can the most consistent set of recommendations in the EPC be assured? Does using only the most recent SAP methodology allow this?
- SAP methodology will continue to change and so advice in most recent EPC assessment should be used.
Question 27: Should listed buildings and those in a conservation area be legally required to have an EPC?
- Yes, all buildings should have an EPC, although acknowledge that all may not be able to achieve required improvement.
- Guidance on minimum standards and expectations for property types to help achieve the SAP rating would assist landlords.
Question 28: Should government seek primary powers to increase the maximum fine level to £30,000 per property for each breach of the PRS Regulations? If yes, should it be adjusted for inflation? If not, what would be an alternative, appropriate maximum fine level? Please provide evidence with your answer.
- Yes, and this will bring it in line with the maximum fine for Civil Penalties.
- No rent should be payable during a breach and Rent Repayment Orders could be used as a redress mechanism.
Question 29: Should government introduce powers for tenants to request that energy performance improvements are carried out where a property is in breach? If yes, how could a redress mechanism be devised?
- Yes. This should be linked to the HHSRS and allow use of Improvement Notices under the Housing Act 2004.
- Rent Repayment Orders could be used as a redress mechanism.
Question 30: Should government introduce some form of local authority disclosure or benchmarking where a property is in breach of PRS Regulations?
- Yes, as this would empower tenants where their landlord is in breach of PRS Regulations.
- To work, this would require a commitment of extra Government funding to support local authority enforcement activity. Local authorities in Greater
Manchester are already overstretched, having experienced unprecedented cuts since 2010 with central government funding cut by almost 50% in real
terms. The pressures of the COVID-19 response make these funding challenges more acute.
Question 31: Do you agree that the updated exemption regime should come into force on 1 April 2025? If yes, do you agree that the property compliance and exemptions database should be opened six months prior to commencement of exemptions? If not, please explain why.
- Proposals seem reasonable. There is a need to ensure transition period so there are no administrative barriers.
Question 32: Should the ‘new landlord’ temporary exemption be simplified so that it applies to any person who has become a landlord within the last six months? Please provide evidence with your answer.
- Exemptions should not be allowed as they are open to abuse.