Private sector energy efficiency upgrade

New regulations governing the energy efficiency of privately rented properties are on the horizon creating major new opportunities for installers.

Speaking at this month’s Labour conference, Energy Secretary Ed Miliband, pledged a major energy efficiency upgrade in the private rental market, so that all rental properties have to achieve Energy Performance Certificates of C or above in order to be leased.

Coming into force by 2030, it has the potential to transform the rental sector, generating an estimated up to £25billion of potential business in energy efficient home improvement upgrades, with potential to create massive new demand for windows and doors.

“It’s a massive market,” says Jody Vincent, sales director, Emplas. “We need to be reaching out to landlords now, to make sure that they see us as part of the solution for improving the energy efficiency of the properties that they rent.

“It doesn’t need to be complicated. It could be as simple as partnering with rental agencies – but now is the time to be doing it.

“With many landlords owning more than one property, there’s also a big opportunity to win repeat business.”

To lessen the impact, Labour is also pledging support to private landlords by introducing a cap at around £10,000 per property.

“To deliver a meaningful upgrade on an older property the cost is going to come in above £10,000, so going forward there is going to have to be some sort of grant scheme in place,” Jody continues.

“That’s a big opportunity for anyone in the home improvement sector. It may not quite be the Green Deal, but it promises to generate significant demand for windows and doors.”

Changes to MEES in the private domestic rental sector

The current rules, which have been effective since 1 April 2020, state that landlords must not continue to let a rental property if it has an EPC (Energy Performance Certificate) rating of F or G, unless an exemption has been applied for and awarded.

Labour’s new proposal picks up on a policy dropped by the last Government to ramp up the energy performance of private rentals to a minimum C rating for all new tenancies by 2025 and all private tenancies by 2028.

“The Government is going to go out to consultation later this year,” Jody continues.

“Ed Miliband is proposing to give landlords of less energy efficient domestic rental properties an extra two-years to up their thermal performance, ahead of regulatory change, compared to the proposals previously dropped by Rishi Sunak.

“Nonetheless, the benefits of early engagement with landlords now, are huge.”

What’s driving Government energy policy?

The authors of the consultation note, “UK housing stock is generally older than in the rest of Europe, and the potential for improvement in the energy performance of our homes is considerable.

“This is perhaps most significant in the private rented sector, which represents 20% of our housing stock, and has the highest concentration of fuel poor tenants (17.7%).

“Improving the energy performance of these homes is a vital part of our wider strategy to decarbonise buildings cost-effectively, in light of the significant challenges posed by climate change.”

“Two things are colliding here, which make a big uptick in required levels of energy efficiency for privately rented properties inevitable,” explains Jody.

“The first and immediate term issue is fuel poverty. Everyone has felt the pinch of rising energy prices, but it’s those in privately rented accommodation, who have often been the hardest hit.

“The second factor is the commitment the Government has made to net zero. Homes account for around 15% of all UK greenhouse gas emissions, so improving their performance is a key element of its strategy.”

Big opportunities for window and door companies

The UK rental market is big. English Housing Survey data shows that, in 2018-19, 20% of all households in England were private renters. This equates to 4.8 million households. In Wales, the PRS makes up approximately 15% of homes, equating to around 210,000 households.

There are also an estimated 2.6m private domestic landlords in England and Wales. Those with a rental portfolio comprising a single property made up the largest ownership group (45%), whilst landlords with a rental portfolio comprising between two and four properties made up 38% of ownership.

“With around £2.9million privately rented homes registering an EPC rating below C, Labour’s proposals represent a major opportunity for window and door companies,” Jody adds.

Not only private rented, but social housing

The same challenge presented by energy efficiency of rented homes applies equally to social housing. The next phase of the Social Housing Decarbonisation Fund is scheduled for launch this autumn. Already committing a multi-billion pound spend to energy efficiency upgrades in social housing, Labour’s announcement this month, is likely to further accelerate delivery.

“Not everyone will be geared up to work on larger scale social housing programmes, it is, however, another area of opportunity for the window and doors industry,” Jody says.

“After a more challenging trading period, the opportunities that a proactive approach to lead generation can deliver are clear. That’s something we have a clear track record of delivering,” he concludes.