A third of UK carbon emissions relate to housing and poor heating systems and inefficient insulation in homes contribute to people living in fuel poverty. Almost 19 million UK homes have an Energy Performance Certificate (EPC) rating of D or worse,(ratings are from A to G). Privately rented homes are among the least energy efficient. Councils can use their enforcement powers in the private rented sector to help improve standards – with Liverpool City Council leading the way.
A key factor for inefficient private sector housing is the reluctance of landlords to bring homes to the minimum legal standard for energy performance. This may be in part due to ignorance of what the regulations are or that a property cannot be bought up to minimum standards due to age or other restrictions. However, any improvements would bring benefits to residents, reduce fuel poverty, and unlock significant carbon savings.
Background: legal standards, national targets and council powers
Minimum Energy Efficiency Standards were introduced for privately rented homes in 2018. Legislation requires privately rented properties to have minimum EPC E. Local authorities are responsible for enforcing the standards and can impose financial penalties on landlords that fail to comply in some way.
the Government has a proposal for the majority of privately-rented properties in England and Wales up to at least EPC band C in the period from 2025 to 2028. Local authorities don’t currently have powers to insist on EPC ratings above the minimum legal standard but can encourage and incentiivise landlords including signposting to funding.
What Liverpool City Council is doing
Using the Governmen EPC register data, Liverpool City Council has mapped the energy performance of privately rented homes in the city with particular attention on those that are lowest rating (F and G) and the basis of improving compliance with Regulations.
From this data, it is taking a two stage approach:
The data mapping identified that Liverpool’s privately rented homes (which account for 32% of the city’s housing stock) include many ageing, poorly insulated properties with bad heating systems. Only one in three privately rented properties have an EPC rating of A to C and many are below the legal standard of E. But the council considers that 73% of F- and G-rated privately rented properties are ‘improvable’.
Engaging with property owners
The project is targeting the worst G rated properties, with a wider awareness campaign around energy efficiency and runs from September 2021 to March 2022. The BEIS funding was awarded on the basis that the city would find extensive and creative ways of engaging with the sector.
The project was launched with a press release, dedicated web page and leaflet for wider awareness raising as well as communication with owners of targeted properties. Letters were sent to private landlords owning over 300 poor properties, alerting them to Regulations and prompting them to either upgrade, claim exemption or seek funding.
Following further review of feedback, claims for exemptions or updated EPCs, the city is taking direct enforcement action against 50+ properties from issuing compliance notices to potential fines within the tight timescale of the project (by end of March 2022).
Communications raised awareness of the EPC system and how to improve EPC performance through steps such as ensuring windows and doors are properly fitted. Officers also made landlords aware of any exemptions that may apply to Minimum Energy Efficiency Standards enforcement. The council also ran webinars facilitated by a leading local landlord to help get owners on board.
If the landlord did not engage or evidence action after receiving two letters, the council issued compliance notices and reserves the right to issue a financial penalty. However, this is a last resort as the authority is keen that private landlords direct their finances into energy efficiency improvements rather than pay fines. In January 2022, the council issued the first of its 50+ compliance notices which is the target set as part of the project funding and achievable by the end of March 2022.
The end of the project, there will be an evaluation and learning points and the City Councils’ Private Sector Housing Enforcement Policy will be updated to include these powers.
Licensing and enforcement
Liverpool City Council will use its proactive licensing activity to improve the condition of rented properties in parts of the city where home energy efficiency is at its worst. This includes both mandatory HMO (houses in multiple occupation) and selective licensing properties.
The council previously ran a citywide selective licensing scheme between 2015 and 2020. This required all privately rented properties in Liverpool to be licensed; by the end of the period there were over 10,000 license holders and nearly 52,000 properties licensed. To be granted a licence, properties had to be suitable for occupation and comply with conditions relating to fire safety and other hazards but did not at this stage include energy efficiency measures.
The introduction of Minimum Energy Efficiency Standards regulations in 2018 prompted the council to consider how the standards could be enforced locally, and how this could contribute to climate action efforts set out in Liverpool’s city plan.
Without a substantive licensing scheme, the Council must respond to an official complaint from tenants or their advocates about their EPC rating before officers can arrange a house visit. Sometimes, tenants themselves can be difficult to engage on EPCs, denying access or fear of retaliatory eviction should a tenant make a complaint about their landlord.
In December 2021, the council’s application for a new selective licensing designation based on poor housing conditions was approved by the Government. This will be introduced on 1st April 2022 and run to 31st March 2027 cover 16 of 30 council wards and 80% of the city’s private rented sector. Many of these have poor energy efficiency alongside other potential serious hazards.
The council will include EPC inspections in its checks on compliance with licensing conditions. The approach will be informed by the Minimum Energy Efficiency Standards project mentioned above, which ends at the same time the new selective licensing scheme starts in 2022.
By creating a consolidated approach with enforcement powers, the council can have a greater impact in tackling non-compliant landlords, whilst creating positive relationships with landlords to make private renting safer and more comfortable for tenants. An intelligence led approach allows local authorities to identify and take the strongest action with non-compliant landlords.
The fees are being finalised in January 2022. Under current proposals, the maximum license fee will be £570 per property, with new landlords or landlords accessing an early bird rate paying a discounted fee of £400 per property.
Encouraging higher standards of energy efficiency
By building relationships with landlords the council can also encourage them to go above minimum legal standards.
Other incentives will include offering landlords with EPC ratings of C+ a further £50 discount per property. As before, income through this route will be ring-fenced to cover staffing costs used directly on inspections and the administration of the scheme.
Liverpool’s ongoing Minimum Energy Efficiency Standards enforcement project identified 1,960 properties with an EPC rating of below E.
The authority identified 467 properties that would require targeted action within the context of the DBEIS funded project. Following a review of EPC register and exemptions register an initial 456 properties were sent to 403 owners of 343 properties. 108 properties improved EPC rating to E or above. Follow up letters have been sent to 310 properties.
Following the two engagement letters, around 200 properties were still non-compliant and of these 50+ were identified for more formal enforcement action starting with issue of compliance letters in January 2022. This may lead to the issue of penalty fines.
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Engagement and education is critical
The council has prioritised proactively engaging landlords. It has invested in a range of communication tools including press releases, a website, leaflet and webinars. It has also got messages out through partner networks to tenants and resident groups.
Moreover, ahead of the new selective licensing designation in April 2022, there will be significant communication and engagement to potential licence holders, tenants, partners and other stakeholders in the targeted areas.
A range of benefits
A strong driver in enforcing the standards is the potential benefits to mental and physical health, as well as economic savings that can reach those living in poor conditions or those in fuel poverty.
For example, an F rated property could cost twice as much to heat as an A rated property – and a G rated property three times as much. The carbon savings delivered by the project also directly relate to Liverpool’s City Plan, and this is another key motivation for enforcing the Minimum Energy Efficiency Standards.
Another key success factor has been a close relationship with Healthy Homes, Liverpool’s council-run fuel poverty service. Healthy Homes has shared knowledge of the city’s poorly performing housing where residents are thought to be living in fuel poverty. This has enabled targeting of these homes.
Liverpool City Council has received £70,000 of funding from the Department for Business, Energy and Industrial Strategy to undertake its work up to March 2022 related to the Minimum Energy Efficiency Standards. The funding was won in a competition facilitated by the Midlands Energy Hub.
There is no additional funding for the licensing scheme, which is intended to be cost-neutral.
The project is led by Liverpool City Council Private Sector Housing Service, which is responsible for all housing licensing and enforcement functions. The project identified the city’s least efficient homes using a range of sources including housing condition surveys and the EPC register.
Liaising with other council departments, and legal complexities
Minimum Energy Efficiency Standards legislation is complex, and regulations can overlap with existing legislation such as the Housing Health and Safety Rating System. This can cause different council departments to disagree on the correct interpretation of the legislation.
It is important to work with internal departments, such as multiple housing teams and trading standards, to set a clear policy and objective, understanding that each department has different priorities amongst the many social issues facing private tenants.
Although the Government has shown confidence in Liverpool by approving a significant licensing scheme, the regulatory landscape is complex with a different legislation and powers. This has been acknowledged in a recent National Audit Office report. As part of its reporting on new schemes and their impact, Liverpool will be reporting to Government as well as producing regular public facing reports on progress.
Learnings from the first round of licensing projects
The council learned from their first private landlord licensing programme that positive engagement should be the priority. It is better to provide information and support to landlords, whilst using examples of good practice within the sector to encourage action. This can reduce time and money spent on compliance issues further down the line.
Find more resources for councils on our Learning Out Loud pages.
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