GREEN DEAL: (PRS) PRIVATE RENTED SECTOR

Traditionally within the private rented sector a landlord would fit the bill for any energy efficiency improvements carried out within or on the property. It is the tenants however that go on to make the savings from the reduced energy bills. The Green Deal scheme is working to bridge this gap and under the Green Deal a landlord will be able to make energy efficiency improvements to their property with no upfront costs to themselves. The repayments are made from the resulting savings on the tenant’s energy bills. Thus allowing the tenant to benefit from an energy efficient home and ensuring that Green Deal energy saving repayments do not negatively impact the tenant or landlord.

The Energy Act 2011 has been put into place to enable the Government to help with ensuring an uptake of cost effective energy efficiency improvements particularly within the Private Rented Sector. This means that the Government will work with and actively encourage the PRS to implement Green Deal energy saving measures through the flagship Green Deal scheme.

Two key points of the Energy Act 2011 follow:

1. As from April 2016, and where financial support is available, such as the Green Deal and or the Energy Company Obligation (ECO) landlords should not unreasonably refuse any request from a tenant for consent to implement energy efficiency improvements.

2. From April 2018 all private rented properties including domestic and non-domestic should commit to being brought up to a minimum energy efficiency standard rating. This is in relation to implementing the Green Deal energy saving measures at no up-front financial cost to the landlord. The minimum energy efficiency standard rating is likely to be set at Energy Performance Certificate rating E. The intention is that the implementation of Green Deal energy saving measures would be considered acceptable when the property has reached the EPC rating E and/or where a tenant has carried out the maximum package of measures funded by Green Deal and/or ECO, significantly even if this does not take the property above an F rating. Thus ensuring no landlord is financially negatively impacted by implementation of the energy saving measures.

Q&A regarding Green Deal and PRS

Who is responsible for making the Green Deal repayments when the property is vacant?
A. This responsibility will fall to the landlord. When a property becomes vacant it is normal that the energy bill reverts from tenant to landlord thus in the future so too will the Green Deal charges.

If a tenant defaults will the landlord be liable?
A. No the landlord will not be liable. As the electricity bill payer it will be the tenant who is responsible for meeting the Green Deal charges. If a tenant defaults it will have no negative impact on the landlord, as is currently the case with energy bill defaults.

Does the tenant or landlord take out the Green Deal?
A. Either tenant or landlord can seek to make Green Deal improvements to the property. However a tenant will not be able to proceed with Green Deal measures to a property without the consent of a landlord. Likewise it is envisaged that a landlord should gain consent of any sitting tenant before implementing Green Deal measures to the property resulting in Green Deal charges to their tenant’s electricity bills. However in periods where the property is vacant a landlord may take advantage of the Green Deal scheme where they intend to make improvements to the property in these void periods.

Why is the PRS sector being specifically regulated?
A. The Private Rented Sector is recognized as having some of the biggest energy efficiency improvements to make. It has a high prevalence of energy inefficient buildings and very poorly insulated homes.
• Comparing to owner occupied households at 3.4%, 5.8% of PRS are EPS rated G.
• 20% of households in the English PRS sector are considered to be afflicted by fuel poverty.
• Almost two-thirds of the non-domestic property sector is also privately rented, 18% of those that are EPC rated, have a rating of only F or G.

Will regulations negatively affect investment in the PRS sector?
A. No. Green Deal energy efficiency improvements will be implemented without up-front financial costs to a landlord. There may be other implementations such as time or hassle costs. But the scheme is committed to ensuring that the benefits from implementation of Green Deal energy saving measures at least meet but more likely exceed these.
In addition the sector is being given plenty of time to prepare. Landlords could easily start implementing Green Deal measures as part of their existing maintenance cycles.

Will there be any penalties if a landlord cannot reach EPC E under the Green Deal?
A. It is considered gold standard for a property to reach the EPC rating E. However any property that has carried out the maximum package of Green Deal / ECO improvements will be considered to have fulfilled their obligation even if these improvements do not take the property above an F rating.
This is to safeguard landlords whose property may be incapable of reaching EPC E despite the energy improvements.

Are there any penalties if the property does not meet minimum Green Deal / ECO standards?
A. Yes, in relation to domestic properties falling short of Green Deal standards there will be a civil penalty of up to £5000.
The penalties regarding Non-domestic properties will be specified in secondary legislation.

In summary the new Green Deal scheme relating to the PRS sector should benefit both the landlord and tenant. The landlord will gain a more energy efficient property thus making it more attractive to a prospective tenant at no up-front costs to themselves. The tenants in turn will feel the benefits of living in an energy efficient property thus helping to tackle fuel poverty.