The condition of some rental properties in the UK is becoming a serious concern. Although Private Rented Sector (PRS) reform has been on the political agenda for a long time, reform efforts have often focussed on balancing the need to safeguard responsible landlords from problematic tenants, as well as protect tenants from ‘no-fault’ evictions and bad landlords.

Private Rented Sector:

Unlike the Social Housing Sector, the Private Rented Sector (PRS) lacks a Decent Homes Standard equivalent, allowing properties that fall below acceptable living conditions to be rented out. In some instances, somewhat due to the lack of decent housing supply, tenants have even taken the option to rent garages and outbuildings in order to live in certain areas.

In addition to the poor compliance and enforcement of the Energy Performance of Buildings Regulations (EPBR), many properties are also being rented without an Energy Performance Certificate (EPC). This means that tenants have no information on how energy-efficient their homes are or how costly they may be to run. This also allows landlords to bypass Minimum Energy Efficiency Standards (MEES), which require PRS properties to meet a minimum EPC E rating, unless a valid exemption is granted. As a result, tenants may be living in cold, draughty, and expensive to run homes, some of which may not even be fit for habitation.

Social Housing Properties:

While social housing generally conforms to higher standards, the shocking conditions of the property at the centre of the Awaab Ishak case, and the lack of timely action from the Landlord, demonstrate that poor accommodation standards are not just found in the PRS. Stronger regulations are needed across all housing sectors.

Government Action:

The previous government was pushing ahead with improvements in both sectors but faced numerous roadblocks, particularly in the Private Rented Sector. Lack of supply, an abundance of demand and fear of further regulation forcing landlords to sell up and leave the market remain key issues.

The current government has outlined several key initiatives. These include:

Build More Homes: Build 1.5 million new homes by the end of the parliamentary term, as well as free up the planning system, set minimum housebuilding targets for councils and encourage ‘build to let’ landlords to address gaps in the PRS. It is important to note that new homes built after 2025 will need to adhere to the Future Homes Standard.

Roll Out Rental Reform Bill: Continue the previous government’s commitment to rollout the Rental Reform Bill, removing the use of Section 21 ‘No fault evictions’.

Introduce Enhanced Decent Homes Standards: Introduce updated Decent Homes Standards for social housing and for the PRS. This standard would require an assessment to be carried out using the Housing Health and Safety Rating System (HHSRS), a risk-based evaluation tool designed to help local authorities identify health and safety hazards and any condition issues, as well as mandate a minimum standard for the heating and energy performance of the home.

Improve MEES Regulations: Raise the Minimum Energy Efficiency Standards (MEES) for rental properties from an EPC E rating to an EPC C rating. This plan was announced by Ed Miliband in recent months, however a public consultation is needed before full details are provided. If and when this is published, it is likely that the proposal will match the previous consultation on this topic.

Roll Out EPC Reform: EPC reform is something the energy assessment industry has long been calling for. Improving the EPC would not only facilitate its future use and help the UK’s journey to net zero, but also support current and future regulations such as MEES.

When can we expect change?

The timeline for these changes is uncertain at the present time. However, government has confirmed that both the EPC Reform consultation and the further Domestic MEES consultation will be published by the end of the year. Government has also confirmed that the response to the Commercial MEES consultation and policy timelines will be released in early 2025.

Depending on what is included, and the relevant details, there could be a range of positive impacts and opportunities for Elmhurst members. These include:

New Build Dwellings

• Increased demand in New Build consultancy work (predictive energy assessments and calculations) and lodged EPCs. At current volumes, this would mean an extra 100,000 homes or more. It is important to note that, whilst this is a target, economic forces may impact the market volume.
• In line with the above, higher demand for air testing of these new dwellings.
• More Ventilation commissioning, as required by the Future Homes Standards.
• Greater demand for Measured Energy Performance (MEP) by housebuilders seeking to differentiate their properties and prove quality.

Existing Dwellings

• Increased reassessments of rental dwellings to ensure that they meet the EPC C requirement, or to identify improvements needed to reach the new standard.
• Higher demand for EPCs at the point of sale, as lenders will focus on improving their properties to meet the Private Rented Sector MEES.
• Greater demand for Stock Condition Assessments, using the Housing Health and Safety Rating System (HHSRS), to show that the property meets Decent Homes Standards. These assessments should take place every 5 years.
• If EPC validity is reduced to 5 years (as per the same timescale for MEES and Stock Condition etc), then there will be increased demand for EPCs.

Despite the opportunities above, the economic climate remains challenging. Interest rates remain high, which isn’t stimulating growth, and the housing market remains softer than previous years. This is set to gradually improve over the next 12-24 months.

While the proposed changes will take time to pass through parliament, the medium-term outlook for Elmhurst members is promising. The energy assessment and retrofit sector is poised for a period of change like never before. Perhaps now is a good time to upskill in preparation for these opportunities.

Further Resources:

Government Guidance: Guide to the Renters (Reform) Bill – https://www.gov.uk/guidance/guide-to-the-renters-reform-bill

MEES Regulations: Minimum Energy Efficiency Standards for Landlords – https://www.elmhurstenergy.co.uk/minimum-energy-efficiency-standards-mees-for-landlords/

Measured Energy Performance (MEP) – https://www.elmhurstenergy.co.uk/blog/2024/07/02/elmhurst-energy-launches-new-measured-energy-performance-mep-scheme/