A private Green Deal
The case for minimum energy efficiency standards in the private rental sector William Baker and Liz LainĂŠ
Contents Summary
3
The consumer need
7
Why regulation is necessary
11
Impact assessment
17
Conclusion and recommendations
26
About Consumer Focus Consumer Focus is the statutory consumer champion for England, Wales, Scotland and (for postal consumers) Northern Ireland. We operate across the whole of the economy, persuading businesses, public services and policy-makers to put consumers at the heart of what they do. Consumer Focus tackles the issues that matter to consumers, and aims to give people a stronger voice. We don’t just draw attention to problems – we work with consumers and with a range of organisations to champion creative solutions that make a difference to consumers’ lives.
A private green deal
2
Summary This report addresses energy efficiency standards in private rental housing. It considers existing regulation of the sector and Government proposals to improve it. The report makes the case for strengthening the Government’s proposals by introducing minimum energy efficiency standards which are gradually improved over time. This should be part of a wider strategy to improve standards in all housing sectors. The Government should help private landlords meet the minimum standards by increasing the Landlords Energy Saving Allowance and facilitate other support. The report also provides evidence on the measures required, and their costs, associated with introducing minimum standards.
Current energy efficiency standards The private rental sector (PRS) has some of the most energy inefficient homes in the country. Nearly 10 per cent of properties are in Energy Performance Certificate (EPC) band G, with a further 18 per cent in band F. The PRS also has the highest incidence of ‘excess cold’ of all housing tenures. Over 400,000 private rental homes – 15 per cent of the total – are classified as a Category 1 ‘excess cold’ hazard under the Housing, Health and Rating System (HHSRS). This is the highest incidence of all tenures. ‘Excess cold’ is a major cause of ill health among private sector tenants, resulting in reduced quality of life and high levels of fuel poverty for the tenants concerned. It also leads to increased costs to health and social services.
Regulation The HHSRS is currently the main tool for regulating the PRS in England and Wales. However, it is not designed to bring about mass roll-out of energy efficiency measures in the sector. The Government’s 2010 Energy Bill proposes to improve regulation by giving tenants the right to request reasonable energy efficiency improvements to their homes, if a review finds that standards have not improved sufficiently by 2014 and that regulation does not decrease the amount of properties available for rent. ‘Reasonable’ is defined as measures that can be funded under Green Deal. However, we argue that regulation should place the onus on landlords to meet minimum energy efficiency standards, rather than rely on tenants to demand ‘reasonable’ energy efficiency improvements of their landlords. It presents evidence of a significant ‘information asymmetry’ 1 between tenants and landlords in which tenants have little information about their property and limited ability to demand improvements.
Improving the Energy bill’s proposals Consumer Focus supports the campaign to improve regulation of the PRS sector. We advocate strengthening the Energy Bill proposals for regulation in the following ways: Make it unlawful for landlords to rent out a property below EPC band E after 2015, just as landlords are currently required to meet certain fire safety standards or carry out annual gas safety checks. This would place the onus on landlords to improve properties to the minimum standard 1
Information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes lead to detriment.
A private green deal
3
Raise the Landlords Energy Saving Allowance (LESA), a tax allowance for energy savings measures, from its current value of £1,500 to £10,000. Make provisions to promote LESA much more extensively than is currently the case (In 2007/08 LESA was only taken up by 0.2 per cent of private landlords). This would help those landlords to meet the minimum standards, particularly those with hard to treat properties Classify all private rental properties in EPC bands F and G as a Category 1 hazard for ‘excess cold’ under HHSRS. This will reduce the costs of risk assessment for local authorities Provide guidance to local authorities on ‘appropriate action’ under HHSRS so that they can advise landlords with low rated properties on the measures required to bring homes up to the minimum standards. These should aim to reduce both health risk and carbon emissions Raise minimum standards over time as part of a strategy to improve standards in all housing sectors to meet both carbon and fuel poverty objectives Require local authorities to keep registers of private rental properties in their area. Local authorities can then combine EPC F and G data with the registers and provide information to landlords on their legal requirements, advice on the measures needed to improve homes and the support available Require landlords, and their agents, to provide an up-to-date EPC at the point of marketing a property to help prospective tenants compare the energy performance of properties Consumer Focus also considers the Government should put in place a plan to improve standards in the social housing and owner occupier housing sectors to complement the PRS provisions. This may require setting minimum standards and progressive tightening of these. Consumer Focus advocates improving all homes to a target EPC band B standard, where practical. This should represent an important step towards the Government’s long term target of reducing carbon emissions in the UK by at least 80 per cent by 2050.
Impact assessment of minimum standards The report includes an impact assessment of the minimum standards proposal. Two scenarios were investigated: the measures required (and their costs), of meeting a minimum band E standard by 2015 and the costs of meeting a minimum band D standard by 2020. The findings of the analysis were as follows: 72 per cent of private rental properties are at band E or better and 33 per cent are at band D or better. Of the remaining 28 per cent (ie those in bands F and G), 39 per cent can be improved to band E for less than £1,500 per property. It would cost an average of £270 per property for those needing to take action 34 per cent of private rental properties are at band D or better. Of the remaining 66 per cent (ie those in bands E, F and G), one-third can be improved to band D for less than £1,500 per property. An additional third can be improved to band D for less than £3,000 per property. It would cost an average of £1,300 for those needing to take action The setting of a band D standard entails significant installation of gas boilers to meet the standard. Thus, many homes require improvements in the £1,500 to £3,000 range
A private green deal
4
About 480,000 (20 per cent) private rental homes require over £3,000 expenditure to meet a band D standard. 290,000 (12 per cent) require over £3,000 expenditure to meet a band E standard. Larger amounts of expenditure are needed because many require air source heat pumps, radiators and solid wall insulation. These properties are much more likely to have solid walls and not have a gas connection (or not use the gas connection) than the private rental sector as a whole It is therefore important that landlords, particularly those owning ‘hard to treat’ properties, can access integrated packages of support to enable ‘whole house’ retrofits. Packages should bring together Green Deal, increased LESA, Energy Company Obligation subsidy and the Renewable Heat Incentive A minimum EPC band E standard would take 150,000 private rented households out of fuel poverty (25 per cent of all private rented households currently living in fuel poverty). A minimum EPC band D standard would take 302,000 private rented households out of fuel poverty (50 per cent)
Background The Government introduced an Energy Security and Green Economy Bill in December 2010, the central component of which is the Green Deal 2. This aims to reduce energy demand and carbon emissions, while making homes warmer, save consumers money and stimulate a green recovery in jobs. The Green Deal consists of four elements: A finance package: Energy efficiency measures are installed at no up-front cost, with that cost covered by a long-term service charge attached to the property via the energy meter. The charge will remain on the property’s energy bill if it changes hands, or if the resident switches supplier The energy company obligation: This will replace the Carbon Emissions Reduction Target (CERT) programme after 2012 and will provide energy efficiency measures to low income consumers and those in hard to treat homes Accreditation: The Government will develop cross-sector accreditation to give consumers confidence in advice and measures provided under the Green Deal Powers to improve energy efficiency standards in the PRS, following a review, considered necessary because of the particularly low standards in sections of this sector Consumer Focus has long advocated a national programme to improve all homes to a minimum standard of EPC band B (SAP81 and above) where practical, or EPC band C where this is not feasible 3. This programme should start with the homes of low income and fuel poor consumers, thus helping the Government to meet its statutory requirement to eliminate fuel poverty, where practical, by 2016 (2000 Warm Homes and Conservation Act). We consider the Green Deal can make a valuable contribution towards the programme, provided it is supplemented with other measures and is open to all consumers.
2
Government, HM. The Energy Bill. [Online] DECC, December 2010. http://bit.ly/fogUE2. EPCs, or energy performance certificates, use an agreed assessment process to generate an AG rating of the thermal performance of a property. G represents the worst rating and A the best. SAP, or Standard Assessment Procedure, is the Government’s system for energy rating homes. It uses a scale of 1 to 100, with a higher rating indicating a better level of energy efficiency. 3
A private green deal
5
Consumer Focus considers the Government should set out a plan to deliver both its fuel poverty and carbon targets 4. Forthcoming Consumer Focus research of energy efficiency policies in Britain and overseas has found that no single initiative is likely to deliver the necessary improvements to the country’s housing stock. An integrated set of policies is required to engage consumers and to enable, exemplify and encourage uptake of energy efficiency measures. Regulation of minimum standards in housing should form part of the mix, with new regulation clearly indicated to the market in advance of the provisions coming into effect. We consider regulation is required as a matter of urgency in the PRS to protect consumers, given that the sector has some of the worst performing homes in the market. The inhabitants of such homes are more likely to live in fuel poverty, more likely to suffer poor physical and mental health and more likely to require health and other services, leading to increased costs. Consumer Focus recognises that all housing sectors need improving. We supported, for example, the previous Government’s proposal to improve all social housing to a minimum standard of EPC band C by 2020, although we were concerned about the lack of detail as to how this would be funded. Nevertheless, the proposal was close to our call for a target EPC band B target and would have resulted in ‘fuel poverty proofing’ homes such that the great majority of tenants would no longer live in fuel poverty. Consumer Focus intends to develop proposals for improving energy efficiency standards in all housing tenures, building on Green Deal and other support structures. In the interim, however, we support the campaign to introduce minimum energy efficiency standards to the private rented sector. The campaign proposes that landlords should not be able to let any property in EPC band F or G after 2015, with a further tightening of standards over time. The campaign also identifies options for improved financial incentives to help private landlords achieve these standards and to enable local authorities provide targeted information and support to landlords through keeping up to date registers of all private landlords in their areas. This report sets out our reasons for supporting the campaign for minimum standards. We also provide evidence, based on commissioned research, on the measures required and the costs entailed of bringing private sector homes up to the minimum standards proposed.
4
Statutory carbon targets include a reduction of 34 per cent by 2020 in domestic housing (carbon budgets) and the requirement that at least 80 per cent of homes should be close to zero carbon by 2050. This latter target is much more stringent than the EPC band B target Consumer Focus advocates.
A private green deal
6
The consumer need Fuel poverty A household is defined as living in fuel poverty if it needs to spend 10 per cent or more of its income on heating the home to an adequate standard and meeting its other energy needs. It has three principal causes: low income, high fuel prices and poor energy efficiency standards. The consequences of fuel poverty include reduced quality of life, poor physical and mental health, debts and/or the forgoing of other essential needs and increased costs to the NHS. The Chief Medical Officer set out some of the human and financial costs of high energy bills and/or cold living conditions 5: Persistent cold, together with the financial worry of being able (or unable) to afford adequate heating, can cause depression. People in fuel poverty are 2.5 times more likely to report high or moderate stress than those able to afford their heating. The financial and emotional costs to the families of those made ill through exposure to cold is great. There are wider considerations too. The annual cost to the NHS of treating winter-related disease due to cold private housing is £859 million. This does not include additional spending by social services, or economic losses through missed work. Our research ‘Raising the SAP’ shows the strong correlation between poor quality housing and fuel poverty: 50 per cent of fuel poor households in England live in EPC F and G homes, compared with 23 per cent of all households in EPC bands F and G 6 . Our research ‘A ‘now cast’ of fuel poverty in 2010’ 7 shows that 28 per cent of PRS tenants in England live in fuel poverty in 2010, compared with 20 per cent of ‘all households, according to the ‘basic income’ definition of fuel poverty 8. The corresponding figures on the ‘full income’ definition are 23 per cent and 18 per cent respectively. Fuel poverty in the PRS is therefore higher than average. However, it is not as high as fuel poverty among local authority tenants. Our research found that 40 per cent of local authority tenants in England live in fuel poverty on the ‘basic income’ definition or 25 per cent on the ‘full income’ definition. The large difference in rates between the two definitions is due to the fact that around 75 per cent of local authority tenants receive housing benefit. This is counted as ‘income’ under the ‘full income’ definition, despite the fact that in most cases the benefit gets paid straight to the local authority landlord. The high fuel poverty rate of local authority tenants reflects the low incomes of most tenants, rather than poor energy efficiency standards which are generally higher than other tenures.
5
Department of Health. 2009 Annual Report of the Chief Medical Officer. Department of Health. [Online]. http://bit.ly/asb3l3 p35 6 Consumer Focus. Raising the SAP. Consumer Focus. [Online] 13 May 2009. http://consumerfocus.org.uk/g/4n5. p11 7 Preston, I and Brigeman, T & Moore, R. A 'now cast' of fuel poverty in 2010. Consumer Focus. [Online] 2010. http://consumerfocus.org.uk/g/4n6. 8 The ‘full income’ definition includes benefits received for housing costs as ‘income’ and is the Government’s preferred definition of fuel poverty. The Government also provides fuel poverty data according to a ‘basic income’ definition, which does not include benefits received for housing costs as ‘income’
A private green deal
7
The PRS, by contrast, has a more diverse range of occupants. It includes very low income tenants living in very poor quality housing, as well as better off tenants (for example those living in ‘buy to let’ properties) who tend to live in better quality housing. The following section considers energy efficiency standards in the different tenures.
Energy efficiency Figure 1 shows that the PRS has the highest proportion of EPC band G homes (218,000) and the second highest of EPC band F homes (423,000) among the four tenures. It also illustrates the high proportion of owner-occupied houses in the lower bands, particularly Band F. Social housing is much more skewed towards the higher rating bands. However, it is notable that private rented housing has a similar proportion of homes in band D to owner occupiers and a significantly higher proportion of homes in band C than owner occupiers. Figure 1: Distribution of English homes by EPC band and tenure
The high proportion of PRS homes in band G and band F is of particular concern since these homes are expensive to heat and particularly prone to cold and damp conditions. The next section considers ‘excess cold’.
Excessively cold homes The risk to health of cold homes is recognised by the HHSRS, a tool that assesses the risks to the health and safety of occupants in residential properties in England and Wales. ‘Excess cold’ is classified as a Category 1 hazard under HHSRS and is the most common type of Category 1 hazard 9. Guidance on HHSRS states that homes with a SAP of less than 35 should be classed as ‘excessively cold’ and therefore a Category 1 hazard. This includes all EPC band G homes and most EPC band F homes. 9
EEPH. HHSRS. Energy Efficency Partnership for Homes. [Online] Energy Saving Trust. http://bit.ly/eUX4gm.
A private green deal
8
Research for the Energy Efficiency Partnership for Homes compared the incidence of Category 1 hazards in different housing tenures in England in 2007 10. It found that 13 per cent of all social housing (0.5 million homes) had Category 1 hazards present. The corresponding figure for privately owned homes (rented and owner occupied) was 24 per cent (4.5 million). The incidence in privately rented homes was even higher at 30 per cent, while Registered Social Landlords (RSLs) had the lowest incidence at 12 per cent 11. Figure 2 below shows that ‘excess cold’ is present in 15 per cent (or 416,000) of homes in the PRS, compared to an average of 10 per cent across all tenures. This is the highest level of all tenures 12. Figure 2: Homes with category 1 excess cold hazard present by tenure, 2007
Compounding the problem of poor quality housing, consumers in rented accommodation have little control over their heating bills or of the installation of energy efficiency measures, and those on low incomes and energy inefficient homes risk poor health by under-heating their homes.
Listed buildings There are a range of problems associated with improving properties due to heritage restrictions. Some of these are private rental properties and some are occupied by the fuel poor 13. It is not possible to install certain measures for both aesthetic and practical reasons: changes in the balance between heat, air and moisture can affect the health of the building and its residents.
10
EEPH. HHSRS. Energy Efficency Partnership for Homes. [Online] Energy Saving Trust. http://bit.ly/eUX4gm. 11 Communities and Local Government. English Housing Conditions Survey, 2007. CLG. [Online] September 2009. http://bit.ly/etRqAT 12 Ibid. P24 13 Changeworks. Renewable heritage. s.l. : Changeworks, 2009.
A private green deal
9
English Heritage has produced guidance on energy conservation in traditional buildings, which are defined as those of solid wall construction; bay or sash windowed and single glazed; no damp-proof course; and likely to have been built before 1919 14. The property owner must gain planning consent (or at least consult with the local planning authority) before installing solid wall insulation if the property is listed or in a conservation area and for the replacement of traditional single glazed sash windows with double glazed PVCu windows 15. However, English Heritage lists the following ways to improve the space and water heating of traditional properties: Install a more fuel-efficient boiler, heating controls and thermostatic radiator valves Insulate pipe-work and hot water cylinders Secondary glazing, with appropriate ventilation Draught-proofing, with appropriate ventilation Loft insulation The Government must consider the impact of heritage restrictions on the potential energy savings from Britain’s homes both with respect to defining minimum standards and with respect to identifying realistic carbon targets for the housing stock.
14
English Heritage. Energy Conservation in Traditional Buildings. English Heritage. [Online] 2008. http://bit.ly/e39hpL 15 Communities and Local Government. Doors and Windows. Planning Portal. [Online] 2010. http://bit.ly/fdOZbi.
A private green deal
10
Why regulation is necessary Existing regulation Local authorities already have a legal duty to take ‘appropriate action’ wherever a property is found to have a ‘Category 1 hazard’ under HHSRS. Local authorities can force landlords to install adequate thermal insulation and a suitable and effective means of space heating so that the home can be economically maintained at reasonable temperatures. However, local authorities will generally first work with landlords to encourage them to install the necessary improvements before resorting to formal action. In 2007, the Energy Efficiency Partnership for Homes (EEPfH), with the support of the Chartered Institute of Environmental Health, carried out a survey of local authority environmental health officers into their use of HHSRS powers 16. The research particularly wanted to see how HHSRS could reduce fuel poverty and carbon emissions. The survey found that authorities were not using HHSRS nearly as widely or as effectively as they could. Authorities varied considerably in the extent to which they carried out inspections and/or took enforcement action. Very few authorities carried out systematic reviews of housing stock in their areas to assess the extent of Category 1 and 2 hazards. A recent report of the House of Commons Environmental, Food and Rural Affairs Select Committee stated that HHSRS ‘is not being pursued as vigorously as it could be’ and recommended that ‘Government urgently reviews the extent to which local authorities use their powers under the HHSRS to tackle excess cold’ 17. Part of the problem relates to the fact that carrying out inspections and enforcing HHSRS is an expensive and timeconsuming process for local authorities. In effect, the current regulatory system represents a considerable burden and is not designed to bring about mass roll-out of energy efficiency measures in the private rented sector.
Improving regulation The Government’s 2010 Energy Bill proposes that the Government carries out a review of the energy efficiency standards in the PRS by early 2014 18. If the review concludes that regulation is necessary and that this will not decrease the number of properties available for rent, tenants will have a right to request ‘reasonable’ energy efficiency improvements. ‘Reasonable’ is defined as any energy efficiency measure that meets the Green Deal’s ‘golden rule’ 19. Local authorities will also have powers to force private landlords to carry out improvements, if landlords refuse requests from tenants. The new regulations would come into force in 2015, if the review considers them necessary.
16
Impetus. Tackling fuel poverty using the Housing, Health and Safety Rating System. s.l. : EEPfH, 2008. 17 Environment, Food and Rural Affairs Committee. Energy efficiency and fuel poverty. s.l. : House of Commons, May 2009. 18 Government, HM. The Energy Bill. [Online] DECC, December 2010. http://bit.ly/fogUE2 19 The ‘golden rule’ states that Green Deal will only fund measures that result in savings on energy bills exceeding the charge on energy bills to pay for the investment, including interest levied on the charge. For ‘hard to treat’ homes, the Energy Company Obligation will provide a subsidy towards measures at a sufficient level to ensure the ‘golden rule’ is met. The Energy Company Obligation is also intended to provide help to low income consumers who are not likely to make sufficient savings on bills to pay the Green Deal charge.
A private green deal
11
We welcome the Government’s proposals. However, we consider the regulations should be strengthened in the following ways: Make it unlawful for landlords to rent out a property below EPC band E after 2015, just as landlords are currently required to meet certain fire safety standards or carry out annual gas safety checks. This would place the onus on landlords to improve properties to the minimum standard Raise minimum standards over time as part of a strategy to improve standards in all housing sectors to meet both carbon and fuel poverty objectives Increase the Landlords Energy Saving Allowance (LESA), a tax allowance for energy savings measures, from its current value of £1,500 to £10,000. This would help support landlords meet the minimum standards, particularly landlords of hard to treat properties Make provisions to promote LESA much more extensively than is currently the case. In 2007/8 LESA was only taken up by 0.2 per cent of private landlords 20 Class all private rental properties in EPC band F and G as a Category 1 hazard for ‘excess cold’ under HHSRS. The government already recognises that properties with a SAP below 35 are ‘excessively cold’. This provision would formalise the association since Band F ranges from SAP 21 to 38. The provision will reduce the costs of risk assessment for local authorities due to, for example, having to spend much less time on inspection of properties Provide guidance to local authorities on ‘appropriate action’ under HHSRS so that they can advise landlords with low rated properties on the measures required to improve homes to the minimum standards. These should aim to reduce both health risk and carbon emissions Require local authorities to keep registers of private rented properties in their area. Many local authorities already do this and use registers for providing targeted information. The Government intends to make all EPC ratings publicly available 21. Local authorities could combine F and G data with registers and provide information to landlords on their legal requirements, advice on the measures needed to improve homes and the support available Require landlords, and their agents, to provide an up-to-date EPC at the point of marketing a property to help prospective tenants compare the energy performance of properties Unfortunately, the Government has not taken the opportunity to require the inclusion of EPC ratings on property advertisements 22. Consumers must have access to information as change cannot be delivered by minimum standards alone – the market needs full information in order to reward those going above minimum standards. As stated above, Consumer Focus considers minimum standards should gradually be raised over time to meet both carbon and fuel poverty policy objectives. We consider a ‘minimum standards’ approach is required in all tenures so that there are a series of ‘stepping stones’ towards meeting our goal of improving homes to an EPC B/C standard, where practical. However, given the likely imminent introduction of PRS legislation, it would make sense for the legislation to also include advance notice of the intent to further raise standards in the future. Many private rented properties will reach a higher standard than EPC E by simply carrying out a few minimal basic improvements, eg loft or cavity wall insulation. Others can reach the higher standard by carrying out marginally more extensive improvements than they would have had to carry out to reach band E. 20
Fuel Poverty Advisory Group. Eigth annual report. s.l. : DECC, 2009. Communities and Local Government. DCLG. Making better use of energy performance certificates and data. [Online] 30 November 2010. http://bit.ly/hlm0qR 22 Ibid 21
A private green deal
12
Landlords who will need to carry out improvements to meet minimum standards may wish to go slightly further and install measures that go beyond the minimum required. For example, they could install a gas central heating system rather than electric storage radiators. By giving plenty of notice that standards will be raised over time, landlords can go straight to the higher standard rather than carry out two sets of improvements which may be less cost effective. Our impact assessment of introducing a minimum standard of EPC E by 2015 therefore also investigated the impact of introducing a minimum standard of band D by 2020 (see Section 4).
Why minimum standards? Consumer Focus considers that regulation is needed to improve standards in the PRS because the current market fails to recognise the value of energy efficient homes, and the costs of resultant ill-health are currently externalised to consumers and the taxpayer. These issues also apply to the owner occupier market. However, the ‘split incentive’ issue (landlords do not make the investment in improving properties because tenants get the benefit) does not apply to the owner occupier sector. Consumer Focus considers that regulation should take the form of ‘minimum standards’, given the particularly low standards in sections of the private rented market and the limitations of HHSRS for enabling wide scale improvements. We also consider the onus should lie with landlords to ensure improvements are carried out, rather than with tenants to demand improvements from their landlords (as proposed by the 2010 Energy Bill 23). We set out the reasons for our preferred approach below.
Information and tenants’ rights Information on the energy performance of a home is provided to consumers in an EPC at the point of rental or sale. Landlords tell us that at present prospective tenants never ask to see the EPC 24. Displaying and actively communicating the EPC at the point of marketing may help consumers who want to take energy costs into account in choosing their home, but even if the information is provided, vulnerable consumers find it more difficult to understand the information in the EPC. In a survey commissioned by EEPH in 2008, 59 per cent of consumers found it easy to understand the EPC but older respondents and those from C2DE social classes were less likely to find it easy 25. Government research shows that ‘tenants, particularly those on low incomes who may have fewer choices in the sector, do not understand their rights and responsibilities and do not know where to go where things go wrong’26.
23
Government, HM. The Energy Bill. [Online] DECC, December 2010. http://bit.ly/fogUE2 Association, National Landlords. Interview. August 2010. 25 EEPH. Private Tenants Research Presentation. Energy Efficiency Partnership for Homes. [Online] Oxford Research Agency, May 2008. http://bit.ly/h9VL6y 26 Communities and Local Government. The private rented sector: professionalism and quality – consultation: summary of responses and next steps. CLG. [Online] February 2010. http://bit.ly/g1bHcx. 24
A private green deal
13
In 2009, Consumer Focus commissioned Ipsos MORI to undertake a Consumer Conditions Survey to understand how 45 different markets in the UK are perceived by consumers based on six key performance indicators relating to confidence and transparency. Overall, renting a property or management services from a private landlord ranked 38th out of 45 sectors 27. Despite a tenancy being an important commitment for the majority of tenants, there is very limited information available to prospective tenants on the track record of private landlords and the underlying state of the properties they let. A tenant has to make a decision on whether to enter into a tenancy based largely on their intuition about a landlord’s character, and typically following a brief and subjective viewing of a property. Thus, any problems with the landlord, and also the property itself, only become apparent to a tenant, once they have committed into a contract with a landlord. In contrast, landlords and letting agents can ask a prospective tenant to provide them with personal and financial information to enable them to make an informed decision about the standing of a tenant before they enter into an agreement with them. Consumer Focus considers there is a substantial ‘information asymmetry’ between landlords and private tenants, in which the landlord is clearly at an advantage. We are currently exploring the potential for introducing a system of ‘reputational regulation’ in the private rented sector to address the issues associated with the information available to tenants and their ability to make informed decisions. We consider such a system would help empower private sector tenants, reward good landlords and over time improve the quality of properties offered and their management. However, with respect to improving energy efficiency standards in the PRS, the above clearly suggests that a regulatory approach predicated on tenants demanding improvements is unlikely to work.
The role of Green Deal The Government considers that the Green Deal will directly address the split incentive problem. The landlord arranges for improvements to be carried out, while the tenant pays for the improvements through a charge on their energy bill. The Government has also said that the new Energy Company Obligation will assist those in fuel poverty and in solid-walled homes. It is not yet clear how the Obligation will work in the PRS. However, landlords have told us that they are unlikely to take up the Green Deal without a further incentive 28. They say it is residents who will benefit, and so it will be up to residents to arrange the work with the agreement of landlords. The 2010 Energy Bill proposes to give tenants the right to demand energy efficiency improvements and local authorities a power to take action against landlords refusing to make improvements. However, this still places the onus on tenants. Given tenants’ lack of market power and information, we consider it unlikely that many tenants will exercise this right. By making it a legal requirement that landlords cannot let a band F or G property, the onus lies with landlords to carry out the improvements. However, we also consider it important that support and information is provided to landlords to help them carry out the necessary improvements. This is why we advocate an increase in LESA, promotion of LESA to landlords and the enabling of local authorities to provide targeted information.
27
Mori, Ipsos. Report on the 2009 Consumer Conditions Survey: Market research survey conducted for Consumer Focus. s.l. : Consumer Focus, 2009. 28 Association, National Landlords. Interview. August 2010.
A private green deal
14
Minimum standards or minimum measures? In its Home Energy Management Strategy, the previous Government proposed to introduce a system that would require private landlords to install loft and cavity wall insulation wherever feasible by 2015. This was a welcome starting point. However, by identifying measures rather than a level of thermal performance (in terms of an EPC rating), there is a risk that the approach does not incentivise the most cost-effective measures for individual properties. The approach also does not create a level playing field for different property types and does not tackle the worst quality homes, where higher cost measures are necessary. Consumer Focus recognises that landlords in higher rated properties should be encouraged to install all cost effective measures. For example, the landlord of a band D property without cavity wall insulation should install insulation. The 2010 Energy Bill proposes that a landlord cannot refuse a tenant’s request to install cost effective energy efficiency improvements, ie any measure that meets the ‘golden rule’ and therefore eligible for funding under Green Deal. We would prefer the onus on installing cost effective measures to lie with landlords, supplemented by minimum standards and provision of information to landlords and prospective tenants.
Implications for SAP measurement There are a small number of homes in the UK whose energy performance cannot be accurately recorded by SAP due to their use of thermal mass and sunspaces. For example, a house at Hockerton Housing Project was rated as EPC F when sold in 2008, with a predicted energy demand of 377kWh/m2. In practice, the average use of a house of this design (based on an assessment of five properties across 12 years) is 34kWh/m2 (including appliances and cooking) 29. Any regulatory mechanism must incorporate a way to review exceptional cases, and must not act as a barrier to innovation.
Implications for human rights The imposition of mandatory energy efficiency measures in homes, whether applying to all homes or such buildings that are undergoing an extension or renovation, has been argued to constitute a breach of human rights under the European Convention on Human Rights (ECHR), namely the right to property and/or the right to respect for one's private life and home. Consumer Focus has sought legal advice on the extent to which the introduction of mandatory minimum energy efficiency standards breaches rights under the ECHR. Advice was sought on the implications of the UK Government forcing property-owners to upgrade their property to make it compliant with the minimum standard and/or restricting the right to rent or sell the property if it does not meet that standard. Although there is some ECHR case law that might support a claim that the introduction of mandatory minimum energy efficiency standards violates human rights, the margin of discretion afforded to governments in their legislative actions is traditionally very wide. It would be necessary to show that such an intrusion to an individual's home is completely disproportionate even when taking into account any wider social benefits deriving from the interference which would be a difficult hurdle to overcome.
29
HHP. Evidence to Zero Carbon Homes Taskforce. [Online] 2010 October. http://bit.ly/hx03He.
A private green deal
15
Given the health and financial benefits to the resident, the financial benefits to taxpayers, and the wider environmental and energy security benefits, it appears that the setting of minimum standards is a proportionate response to poor quality housing.
Financial implications
The introduction of minimum standards, with a gradual tightening of standards over time, will require considerable investment in energy efficiency measures. Of course such investment will result in long term savings in energy bills, reduced carbon emissions, increased comfort for tenants, improved health and reduced costs to health and other services. However, we recognise that it is important to assess the likely measures required to meet the minimum standards and the costs involved. The next section gives details of the research we commissioned to assess this.
A private green deal
16
Impact assessment The research Consumer Focus commissioned the Association for the Conservation of Energy (ACE) to investigate the measures required, and the costs involved, of introducing a minimum EPC band E standard to the private rented sector by 2015. The assessment also investigated the implications of introducing a higher minimum band D standard by 2020. The following presents the results of this analysis. ACE used a similar methodology to that used for the ‘Raising the SAP’ research it carried out for Consumer Focus in 2009 30. Essentially, ACE modelled the measures required, and their costs, to improve private sector homes to a target band E and a target band D standard, using the private sector sample of the 2006 English House Condition Survey (updated to reflect the likely situation in 2009 using modelled changes in energy efficiency, income and fuel prices between 2007 and 2009). The costs used for the modelling are taken from the latest estimates of costs of individual measures, provided by EST and agreed with DECC for some Consumer Focus research on Green Deal31. Table A3 in the appendix gives details of the costs for standard measures for a three bedroom semi-detached house (although the modelling involved a much greater range of property type and circumstances). The appendix also gives details of the methodology used for the modelling. Note the limitations imposed on the modelling due to, for example, listed building status, property type or household characteristics. ACE ran two versions of the model; one based on improving homes to a target band E standard and the other on improving homes to a target band D standard. This allowed ACE to calculate the marginal effort for landlords currently owning properties at bands F or G to improve to band D, rather than band E. ACE also investigated the distribution of measures required in the improvement packages across different house types and heating systems and the impact of the improvement packages on fuel poverty levels.
Impact on energy efficiency standards The analysis was based on 2.37 million private tenanted properties. Just over 72 per cent of properties are already at band E or better and 33 per cent are at band D or better. Approximately 650,000 properties need improvements to comply with a band E standard. However, due to the nature of the improvements required, 130,000 of these go beyond band E and reach band D or better. A further 100,000 properties will remain ‘stuck’ at band G, F or E with the measures used in the analysis (although their energy efficiency performance still improves from original level). It is not possible to improve these properties to band D due to heritage restrictions or because more expensive measures than those modelled are required. Figure 3 below shows the number of properties affected by setting band E and band D standards. The brown columns show the current distribution of private rental properties by EPC band; the purple column, the distribution of properties after setting a Band E standard and the green columns, the distribution of properties after setting a Band D 30
Consumer Focus. Raising the SAP. Consumer Focus. [Online] 13 May 2009. http://consumerfocus.org.uk/g/4n5. p11 31 DECC. Extending the Carbon Emissions Reduction Target to December 2012. Impact Assessment. s.l. : DECC, 2010.
A private green deal
17
standard. Table A4 in the appendix gives the data used for Figure 3. The appendix also includes the data tables for all subsequent graphs in this analysis. Figure 3: Change in EPC rating
Figure 3 shows that by setting a Band E standard, some properties go straight to Band D (but not to Band C). Similarly, by setting a Band D standard, some properties go straight to Band C. This is because the modelling adds measures incrementally until the target standard is achieved. However, the addition of certain single measures brings about a substantial enough improvement to allow the property to ‘skip’ an EPC band. The graph also shows that a third of properties (about 800,000) are already at band D or above and therefore need not take any further action. About 40 per cent of properties (924,000) achieve band D or above through the setting of a band E standard.
Cost of improvement programmes Figure 4 below illustrates the number of private rental homes that fall within the different cost improvement ranges required to meet a band E and a band D standard (see Table A5 in the appendix for data).
A private green deal
18
Figure 4: Banded costs of improvement
Figure 4 shows that the great majority of private rental properties can be improved to band D at a cost of less than £3,000, with most requiring less than £1,500 expenditure. Table 1 below shows the cumulative costs of improving private rental properties to a band E and a band D standard, including the marginal costs of moving from band E to D. Table 1: Cumulative costs of improving homes to band E and D Band E
a) no need for b) £0-1499 c) £1500-2999 d) £3000-5999 e) £6000-9999 f) £10000-14999 g) £15000-24999 n) £25000+
cumulative
0 £70m £298m £563m £781m £2,128m £3,731m £3,770m
Band E to D
% 72% 83% 88% 91% 92% 97% 99.9 100%
cumulative
0 £172m £1,368m £1,864m £2,296m £3,337m £3,537m £3,558m
% 43%1 65% 89% 94% 96% 99.5% 100% 100%
Band D
cumulative
0 £152m £1,427m £1,906m £2,339m £4,260m £6,837m £7,328m
% 34% 56% 80% 85% 87% 94% 99% 100%
1
This includes properties that cannot be improved to a Band D standard with the measures modelled in the analysis
With respect to meeting a band E standard, the analysis found that: 72 per cent of private rental properties are already at band E or better Of the remaining 28 per cent (i.e. those in bands F and G), 39 per cent can be improved to band E for less than £1,500 per property The cumulative cost of this is £70 million, or an average of £270 per property for those needing to take action A private green deal
19
88 per cent of properties are either already at band E or can be improved to band E for less than £3,000 The cumulative cost of this is just under £300 million, or an average of £810 per property for those needing to take action With respect to meeting a band D standard, without first meeting band E (ie the costs are not additional to those of complying with band E), the analysis found that: 34 per cent of private rental properties are at band D or better Of the remaining 66 per cent (ie those in bands E, F and G), one-third can be improved to band D for less than £1,500 per property. An additional third can be improved to band D for less than £3,000 per property The cumulative cost of this is £1.43 billion, or an average of £1,300 per property for those needing to take action 85 per cent of properties are either already at band D or can be improved to band D for less than £6,000 The cumulative cost of this is £1.91 billion, or an average of £1,570 per property for those needing to take action
Measures required to meet minimum standards Figure 5 below shows the measures required to bring private rental properties up to a band E and band D standard (data given in Table A6 in appendix). Figure 5: Measures required to meet minimum standards
A private green deal
20
Figure 5 shows that: The cheap measures (CFLs, top-up loft insulation, draught-proofing and cavity wall insulation) play an important role in meeting the minimum standards (more so for meeting band E than band D) Efficient gas boilers play a much more significant role in complying with band D. It is these boiler replacements which bring the cost of improvements into the £1,500-3,000 range The vast majority of homes can be improved with fairly non-intrusive measures, eg loft and cavity wall insulation and gas boilers. Only a small minority need the more intrusive measures such as internal and external wall insulation The most frequently installed expensive measures are air source heat pumps and external wall insulation. Homes requiring these measures will always cost more than £3,000 to improve. These cases and measures are examined in more detail below
Private sector homes requiring more expensive measures Figure 6 below gives details of the number and type of measures required to improve hard to treat private rented homes, that is those that will cost more than £3,000 to meet a band E or band D standard (see Table A7 in appendix for data). Figure 6: Measures required for homes that cost over £3,000 to improve
Approximately 480,000 homes (20 per cent of all private rental properties) require over £3,000 expenditure to meet a band D standard. Around 290,000 properties (12 per cent) will require over £3,000 expenditure to reach a band E standard. These properties will require one or more of a number of measures including double-glazing, ground-source or air source heat pumps, internal wall insulation, insulating render, oil condensing boilers and solar water heating.
A private green deal
21
The modelling involved installing air source heat pumps in homes which do not have an existing gas connection (which does not necessarily mean they are off the grid) and in homes which have small room sizes. To a lesser degree, solar water heating, oil boiler replacements (which are more costly than gas systems) and ground source heat pumps (which are installed in larger, off-gas properties) contribute to the higher costs of improving these homes. The following section gives more details of the 480,000 private rented sector homes that are ‘hard to treat’, that is they cost more than £3,000 to improve to a band D standard.
Characteristics of hard to treat private sector homes Figure 7 below compares the distribution of property type for all private rented sector homes and hard to treat homes, that is those costing more than £3,000 to improve (see Table A8 in appendix for data). Figure 7: Built form of hard to treat and ‘all’ private rental homes
Figure 7 shows that there are fewer purpose built flats and mid-terrace homes and more converted flats and detached homes in the ‘hard to treat’ category in comparison with the PRS as a whole. The most common built forms found to require air source heat pumps were ‘converted flats’ and ‘purpose-built flats’ (66,000 and 65,000 respectively). These flats did not have gas and generally had small room sizes which made them suitable for air source heat pumps. The modelling assumed a fairly high and probably unrealistically large number of air source heat pumps were required in purpose-built blocks of flats. In reality, there may be cheaper and more efficient electric heating systems that would enable flats to comply with minimum standards. This option was not included in the modelling. It may also be the case that as a result of minimum standards, landlords install gas heating systems into individual flats, or a communal boiler with separate controls for each flat if they own the whole building.
A private green deal
22
Figure 8 below shows the wall type for all private sector homes and for homes that cost more than £3,000 to improve to a band D standard (see Table A9 in appendix for data). Figure 8: Wall characteristics of hard to treat and ‘all’ private rental homes
Figure 8 shows that solid-walled properties feature more prominently among homes that cost over £3,000 to improve. In many solid wall properties, efficient gas boilers represent the cheapest option to comply with band D. Where this is not enough, and/or properties are off the gas grid, solid wall insulation is necessary. Figure 9 below shows the gas ‘connectivity’ for all homes and for homes that cost more than £3,000 to improve to a band D standard. Homes that do not use gas for heating may have access to a gas connection but do not use it (see Table A10 in appendix for data).
A private green deal
23
Figure 9: ‘Gas connectivity’ for hard to treat and ‘all’ private rental homes
Figure 9 shows that private rental homes that cost more than £3,000 to improve are much less likely to have gas heating than ‘all’ private rental homes. This is not surprising, given that it is much more costly to install efficient heating systems, such as heat pumps, in ‘non-gas’ homes. As stated above, the modelling did not include possible cheaper alternative systems, such as efficient (and cheaper to run) electric systems, communal and district heating, and micro-CHP. It is also worth noting that the forthcoming Renewable Heat Incentive will make alternatives, such as heat pumps, a much more attractive proposition for off-gas homes.
Impact on fuel poverty The analysis investigated the impact of introducing minimum standards on the level of fuel poverty in England. In 2009, just over a quarter of private rented households were in fuel poverty on the ‘full income’ definition (614,000). Note that the analysis was based on 2006 EHCS data, which was projected to 2009 levels. The Consumer Focus research referred to above (A ‘now cast’ of fuel poverty) projected fuel poverty to 2010 32. This found that 584,000 private rented households (23 per cent) lived in fuel poverty on the full income definition; 723,000 (28 per cent) on the ‘basic income’ definition. Table 2 below shows the impact on fuel poverty of introducing a minimum band E and a minimum band D standard. Table 2: Impact of minimum standards on fuel poverty No change Band E Band D
464,000 302,000
Lifted out of fuel poverty 150,000 312,000
32
Consumer Focus. Raising the SAP. Consumer Focus. [Online] 13 May 2009. http://consumerfocus.org.uk/g/4n5. p11
A private green deal
24
Table 2 suggests that the introduction of minimum standards would have a substantial impact on fuel poverty. A band E standard reduces fuel poverty by 25 per cent, while a band D standard reduces fuel poverty by 50 per cent. Thus, a band D minimum standard results in twice as many fuel poor households being taken out of fuel poverty as a band E standard. While a significant number of households remain in fuel poverty under both scenarios, these households are still materially better off, ie the severity of their fuel poverty is reduced. While the introduction of minimum standards would have a significant impact on fuel poverty, Consumer Focus still considers the Government should encourage a ‘whole house’ approach to refurbishment, and aim to improve homes to a much higher standard of EPC B, where practical. The impact on fuel poverty of an ambitious programme designed to meet such a standard would be considerable. Our ‘Raising the SAP’ research suggested it would remove 83 per cent of fuel poor households from fuel poverty 33.
33
Department of Health. 2009 Annual Report of the Chief Medical Officer. Department of Health. [Online]. http://bit.ly/asb3l3 p35
A private green deal
25
Conclusion and recommendations This report sets out the case for introducing minimum energy efficiency standards to the PRS. In line with current campaign, it proposes introducing a minimum standard of EPC E by 2015, with a gradual tightening of the standard over time. The report argues that the introduction of minimum standards would have a dramatic effect on eliminating ‘excess cold’ from the PRS. This is a major cause of ill health among private sector tenants which imposes a cost on taxpayers in the form of increased costs to health and social services. It also results in reduced quality of life and high levels of fuel poverty for the tenants concerned. The report presents evidence on the high level of PRS homes in the worst performing energy efficiency bands (bands F and G), although it also finds that private sector homes also perform slightly better in the higher bands than owner occupied homes. This is considered to reflect two distinct markets in the sector. The report puts the case for regulation taking the form of a requirement on landlords to meet minimum standards, rather than giving tenants the right to request ‘reasonable’ energy efficient improvements from landlords. It presents evidence of a significant ‘information asymmetry’ between tenants and landlords in which tenants have little information about their property and limited ability to demand improvements. The report recognises that private landlords will require support and information to meet the minimum standards. It puts the case for an increased Landlords Energy Saving Allowance and the provision of more information to landlords via local authorities. The report presents evidence on the type of energy efficiency measures required and their costs to meet the minimum standards. It considers two scenarios: meeting a minimum standard of band E by 2015 and meeting a minimum standard of band D by 2020. The assessment shows that the bulk of private rented sector homes can meet the standards at low cost. The very act of taking action to meet a band E standard will enable a significant number of private rented properties to meet band D due to the nature of measures installed. The analysis found that a minority of private sector homes are hard to treat and will therefore require more expensive measures (defined as those costing more than £3,000) to meet the new standards. These homes are typically built with solid walls and/or not connected to a gas supply. The analysis presents evidence on the type of measures required to meet standards for these homes. Air source heat pumps and to a lesser extent, solid wall insulation will be required. As with any regulation, minimum standards must not act as a barrier to innovation. Provision of information to the market, through the inclusion of EPC ratings on property marketing materials, is necessary to raise awareness and aid comparison early in the rental (and purchase) process. There must also be a system to continuously improve SAP to incorporate new building approaches, materials and products, and allow for exceptional cases.
A private green deal
26
Recommendations The Energy Security and Green Economy Bill must: establish a timetable for the introduction of minimum legal standards of energy efficiency that a privately rented property must reach before it is made available for rent classify EPC band F and G homes as a Category 1 hazard, making them liable for local authority action make provision for raising minimum standards over time Secondary legislation should: set a deadline of no later than 2015 after which it will be an offence for a landlord to let a property which is below an EPC band F or G (five years’ notice from the passing of the Act) raise the Landlords Energy Savings Allowance to £10,000 to help support landlords meet the new standards. The Government should also set out plans for promoting the allowance to landlords give the Secretary of State a duty to set out a strategy for improving the energy performance of listed properties improve information on properties that pose a risk to tenants by giving the Secretary of State the power to require landlords to register their properties with the relevant local authority raise awareness and enable informed decision-making by requiring the inclusion of the EPC rating on all property marketing material provide an appeals process (and related feedback loop) to prevent SAP-based regulations from creating barriers to innovation in building approaches, materials and products Make sure private landlords can access integrated packages of support, particularly those owning hard to treat homes, to enable ‘whole house’ retrofits. These should bring together Green Deal, improved LESA, Energy Company Obligation subsidy of solid wall insulation and use of the Renewable Heat Incentive to install heat pumps etc. The Government should put in place a plan to improve standards in the social housing and owner occupier housing sectors to complement provisions for the PRS. This may also require setting minimum standards and progressive tightening of these. Consumer Focus advocates improving all homes to a target EPC band B standard, where practical. This should represent an important step towards the Government’s long term aim of achieving a zero carbon target for 80 per cent of homes by 2050.
A private green deal
27
Annex: Impact assessment methodology and data Impact assessment methodology The methodology consisted of three stages: 1. Application of the SAP improvement calculator (SIC) tool 2. Matching the EHCS 2006 dataset with modelled SIC buildings 3. Improving the SIC buildings through the application of improvement packages
SAP improvement calculator tool The SAP improvement calculator utilises the Government’s Standard Assessment Procedure (SAP 2005) for assessing the energy performance of dwellings. SAP 2005 estimates the energy demand and CO2 emissions of a building, based on its material construction, thermal insulation, ventilation characteristics, heating system efficiency, solar gains, fuel mix, and the presence of renewable energy technologies. The rating itself is based on a scale of energy costs per m2 of floor space. The improvement calculator replicates this underlying calculation but narrows the range of permissible entries by defining ‘base builds’ and ‘measures’; the presence/absence of which alter the values used in the calculations. There are 84 ‘base builds’ used, each representing a combination of building type, wall type and floor area, with the latter approximated from the number of bedrooms (see table A1 below). The built form determines the geometry of the building, as well as parameters such as the exposed wall area, glazed area and roof area. This geometry is scaled according to the number of bedrooms selected, with each bedroom number representing a floor area for that built form. The selection under wall type determines both the underlying thermal performance of the facade and the appropriate improvement measures subsequently offered. Table A1: Base build options Build Form
Wall Type
Bedroom Number
Top floor flat Mid floor flat Bottom floor flat Semi-detached Detached Terrace End terrace Attached bungalow Detached bungalow
Cavity wall Solid wall Non-traditional wall
1,2, or 3 if build form is flat 2,3 or 4 if semi, terrace or bungalow 2,3,4 or 5 if detached
A series of optional ‘measures’ were defined to enable the performance of buildings that conform to the same ‘base build’ to be distinguished. There are eight categories of measures: loft insulation, wall insulation, glazing, draught proofing, compact fluorescent lights (CFLs), heating system, renewable technologies, and secondary heating system. The full list of options is given in Table A2.
A private green deal
28
The presence or absence of these measures affect the SAP 2005 calculation in different but logical ways. The presence of wall insulation reduces the U-value of the exposed walls depending on the type of insulation used for example. Table A2: Measure options Loft insulation 25mm/None 100mm 270mm
Wall insulation Cavity wall insulation External wall insulation Internal wall insulation
Glazing Single glazing 6mm double glazing 16mm double glazing
Draught proofing None
CFLs
Heating system
None
Old gas boiler
50% CFLs
Old gas combi
CFLs
Old oil boiler Old oil combi Electric storage
Renewables
Open coal fire
Solar hot water Photovoltaics
Electric underfloor heating Gas condensing boiler
Draught proofing
Gas combicondensing boiler Oil condensing boiler Oil bombicondensing boiler Biomass boiler Air source heat pump Ground source heat pump
Each measure is assigned a floor-area and built form-dependent installation cost (and a maintenance cost if appropriate), with the cost of all measures added to create a total cost for the combination of base build and measure – the ‘package’. The SAP 2005 calculation is run for each ‘package’ permutation, except in cases where the measures are not appropriate for the built form – most notably, the combination of loft insulation, renewable technologies and certain heating systems with flats. There are more than four million possible package permutations in total. For each package, current fuel costs are used to estimate the fuel bills. The following was then calculated for each package: Energy demand Package installation cost EPC rating
Matching EHCS with the SAP Improvement Calculator (SIC) To determine the measures required to improve the housing stock, the buildings in the English House Conditions Survey (EHCS) were incorporated into the SIC. The equivalent EHCS variable for each SIC parameter was established, and logic functions used to resolve the appropriate measure to be applied in SIC. This created a ‘copy’ of each EHCS building within the SIC.
Improving the SIC buildings Within the overall constraints – meeting EPC bands E and D respectively – measures were applied to each building in order to improve its SAP rating. The different applicable improvement measures and the order of their installation (hierarchy) were determined. Macros were written to perform the following steps: Copy the initial SIC building and its performance results into a new sheet Apply first measure; assess to see whether band D or E is met. Stop if yes, otherwise: Apply second measure etc...
A private green deal
29
...all of this subject to additional constraints flagged up in the EHCS dataset. The constraints err on the side of caution (so as not to be overly optimistic about the numbers of properties into which measures can be practicably installed), and include for example: Ground source heat pumps installed only where the property is not currently heated by gas, and the garden is above a certain size Biomass boilers only installed where one household member is 60 or younger External and internal wall insulation, double glazing and other ‘intrusive’ measures not installed into listed buildings Internal wall insulation only installed in properties where rooms are not small Roof-based renewables only installed where roofs are appropriate Air source heat pumps only installed in dwellings that aren’t large For each scenario the hierarchy was based on adding the most cost effective measures first. Following the completion of the macro, the energy consumption and fuel costs across each fuel type were known for each building before and after improvement, together with a list of the measures installed.
Feeding the results back into the EHCS The proportional savings for each building as determined in the SIC were then applied back into the EHCS results with a re-calculation of the fuel costs per household. The fuel costs were utilised to work out the numbers of households now needing to spend more than 10 per cent of their income on fuel bills, and hence remaining in fuel poverty.
Data used for graphs and analysis presented in impact assessment Table A3: Cost of measures Top up loft insulation Full loft insulation Cavity wall insulation Internal wall insulation (£70 per m2) External wall insulation (£85 per m2, plus £1,500 fixed cost) Double glazing Draught proofing CFLs (inc fitting) Gas combi-condensing boiler Gas condensing boiler Oil combi-condensing Boiler Oil condensing boiler Biomass boiler Air source heat pump Ground source heat pump Solar hot water system
A private green deal
£ 300 £ 400 £ 400 £ 5,950 £ 8,700 £ 5,150 £ 100 £ 12.50 £ 2,000 £ 2,000 £ 3,000 £ 3,000 £ 11,000 £ 8,000 £ 13,500 £ 4,800
30
Table A4: Change in EPC rating after setting band E and band D standards (see Figure 3) G F E D C B
Before Band E Band D 218,000 15,000 15,000 437,000 56,000 56,000 920,000 1,376,000 101,000 582,000 713,000 1,721,000 207,000 207,000 470,000 4,000 4,000 5,000
Table A5: Banded costs of improvement (see Fig. 4)
a) no need for action
skipping to reach D after complying with Band straight to Band complying with Band E D E 793,000 1,026,000 1,713,000
b) £0-1499
520,000
521,000
263,000
c) £1500-£2999
575,000
555,000
103,000
d) £3000-£5999
115,000
113,000
67,000
e) £6000-9999
57,000
53,000
29,000
f) £10000-14999
157,000
89,000
110,000
g) £15000-24999
133,000
11,000
81,000
18,000
1,000
2,000
n) £25000+
Table A6: Measures required to meet minimum standards (see Fig. 5) CFLs top-up loft insulation draught-proofing cavity wall insulation gas condensing boiler gas combi condensing boiler Radiators air source heat pump external wall insulation 16mm double glazing full loft insulation solar water heating oil condensing boiler flexible insulated lining photovoltaics internal wall insulation ground source heat pump underfloor heat distribution insulating render biomass boiler oil combi condensing boiler
A private green deal
Band E
604,000 279,000 317,000 154,000 57,000 35,000 127,000 116,000 61,000 35,000 61,000 32,000 34,000 23,000 8,000 26,000 36,000 36,000 24,000 12,000 4,000
additional for Band D 832,000 453,000 282,000 303,000 242,000 243,000 69,000 63,000 77,000 69,000 30,000 45,000 21,000 28,000 37,000 16,000 5,000 5,000 16,000 6,000 1,000
31
Table A7: Measures required for homes that cost over £3,000 to improve (see Fig. 6) Band E CFLs Radiators top-up loft insulation draught-proofing air source heat pump external wall insulation cavity wall insulation 16mm double glazing solar water heating oil condensing boiler photovoltaics ground source heat pump underfloor heat distribution insulating render full loft insulation internal wall insulation flexible insulated lining biomass boiler gas combi condensing boiler gas condensing boiler oil combi condensing boiler
267,000 127,000 116,000 153,000 116,000 61,000 52,000 33,000 32,000 34,000 8,000 36,000 36,000 24,000 26,000 20,000 11,000 12,000 1,000 4,000 4,000
additional for Band D 169,000 69,000 80,000 38,000 63,000 77,000 66,000 60,000 45,000 21,000 37,000 5,000 5,000 16,000 12,000 14,000 23,000 6,000 14,000 8,000 1,000
Table A8: Built form of hard to treat and ‘all’ private rental homes (see Fig. 7) purpose-built flat mid terrace semi detached converted flat end terrace detached non-residential
All PRS HTT PRS 593,000 77,000 552,000 70,000 410,000 92,000 326,000 102,000 255,000 63,000 220,000 75,000 13,000 1,000
Table A9: Wall characteristics of hard to treat and ‘all’ private rental homes (see Fig. 8) cavity walls solid walls non-trad walls
All PRS
1,208,000 1,115,000 45,000
HTT PRS 157,000 314,000 10,000
Table A10: ‘Gas connectivity’ for hard to treat and ‘all’ private rental homes (see Fig. 9) no gas connection / gas connection not used gas is main heating fuel
A private green deal
All PRS
HTT PRS 624,000 375,000
1,744,000
106,000
32
A private Green Deal The case for minimum energy efficiency standards If you have any questions or would like further information about our response please contact William Baker, Principal Policy Advocate, by telephone on 020 7799 7900 or via email: william.baker@consumerfocus.org.uk
www.consumerfocus.org.uk Published: December 2010
If you require this publication in Braille, large print or on audio CD please contact us. For the deaf, hard of hearing or speech impaired, contact Consumer Focus via Text Relay: From a textphone, call 18001 020 7799 7900 From a telephone, call 18002 020 7799 7900
Consumer Focus 4th Floor Artillery House Artillery Row London SW1P 1RT Tel: 020 7799 7900 Fax: 020 7799 7901
Media Team: 020 7799 8004 / 8005 / 8006
A private green deal
33