Private rental sector ‘ill-prepared’ for net zero

British Gas has called on the government to introduce kitemarked loans and tax relief for energy efficiency measures in the private rental sector, which it says is “ill-prepared” for net zero.

In a new report, Greening the Private Rental Sector, the Centrica-backed supplier highlights what it sees as the focus of home decarbonisation and insulation schemes on low income homeowners and the social rented sector, while the private rental sector “has been left out of policy discussion and research”.

There are around 4.6 million homes in England (19%) that are privately rented. The share of renters has nearly doubled since the early 2000s and is projected to continue to grow. Currently almost two-thirds of these homes require energy efficiency improvements, and the sector has lower rates of low-carbon heating and smart technology installations than owner-occupied and social rented homes.

Research conducted by the supplier found a low appetite among landlords to install green measures within the next five years, despite 81% of landlords believing further improvements are required for their property to be more environmentally friendly.

“This should serve as a ‘warning light’ that policy to date is not successfully capturing the private rental sector,” it says.

The report adds: “Government has not set out a coherent net zero pathway for the private rental sector, leaving landlords and the retrofit supply chain ill-prepared for the fast approaching net zero 2050 goal.

“Delaying action does not delay the cost of transitioning Britain’s homes – it simply shifts the responsibility of those costs away from landlords towards tenants and puts our net zero goal in jeopardy.”

A survey of landlords conducted for the report found that despite 56% being concerned about the environment and thinking the UK government and public generally are taking too little action to address climate change, “they remain unconvinced that making environmental improvements will benefit their property and its rental value”.

There is also a lack of knowledge of EPC standards, with 44% of respondents not knowing their EPC rating. This is despite the fact that the requirement for the EPC rating to be E or higher has already been in place since 1 April 2020.

Furthermore two thirds of those surveyed either don’t know or have overestimated the average cost of bringing a property up to EPC C standard, which had previously been a target for rental homes before Rishi Sunak’s speech in September this year which rowed back on the government’s net zero strategy. The cost of bringing a property up to EPC C is estimated to be more than £7,400.

There is also a lack of knowledge about the grants available with more than half (52%) of those surveyed stating that they do not know enough about their options.

The recommendations made by the report include a Green Upgrade Relief to incentivise the uptake of energy efficiency measures and low carbon technologies. This would be deducted in-year from landlords’ taxable rental income. This should only be eligible for a list of specified measures, such as loft and wall insulation, double glazing, heat pumps, solar panels and EV charge points, the report said.

The report also calls for the introduction of a government-backed kitemarked loan product as has been introduced in Scotland. This would see private lenders offer low and no interest loans partially funded by the UK Infrastructure Bank for landlords to install energy efficiency measures.

Other recommendations include:

• Launch a one-stop shop for advice and guidance service from Energy Saving Trust modelled upon Scotland’s Home Energy service, something British Gas and Barclays have started by launching a series of free events to help Plymouth residents explore how to make their homes more energy efficient;
• Start the data-gathering process to implement Building Passports for individual properties;
• Update the Renters Reform Bill so landlords cannot reasonably refuse a smart meter installation, to strengthen renters’ rights and awareness of rights

Gail Parker, director of low carbon homes at British Gas, said: ”This report shows that whilst landlords across the UK are willing to make changes so that their properties are more energy efficient for tenants, they lack the knowledge and financial support to do so.

“It’s key that we work with the government and the industry to ensure they have the ability to make these changes easily and affordably.

“We are calling for more focus to be made on the issue to help make homes more energy efficient for everybody, not just people who own their own properties.”