Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith /
Climate Change, Environment and Infrastructure Committee
Datgarboneiddio'r sector tai preifat / Decarbonising the private
housing sector
DH2P_23
Ymateb gan / Evidence from Property Mark
August 2022
Background
1.
Propertymark is the UK’s leading professional body of
property agents, with over 18,000 members representing over 12,800
branches. We are member-led with an executive Board of practicing
agents who we work closely with to ensure that we uphold
high-standards of professionalism and are able to advocate for
legislative change on behalf of the sector.
Questions
The current approach to decarbonising housing in the private rented
and owner-occupied sectors in Wales, including the effectiveness of
existing programmes and support for retrofit;
2.
Propertymark supports the Welsh Government’s aims of
achieving net zero by 2050 and all new homes in Wales to be heated
and powered from clean energy sources from 2025[1].
However, support for private rented and owner-occupied sectors in
Wales have not been effective. This is due to three factors.
Firstly, despite owner-occupiers and private landlords owning more
than 80% of all Welsh homes,
the current retrofit approach in Wales has focused on social
housing only through the Optimised Retrofit Programme.
Secondly, support for the private rented sector has only focussed
on low-income families through the Nest funding.
Thirdly, unlike the UK Government’s Green Homes Grant scheme,
the Welsh Government have not provided any grant support to
landlords to meet energy efficiency targets set out in law, and
homeowners to make improvements. The Green Homes Grant scheme is
only applicable to landlords in England, and there is no equivalent
scheme in Wales.
For the private rented sector in England and Wales under the Energy
Efficiency (Private Rented Property) (England and Wales)
Regulations 2015
and subsequent amended legislation, it is only four years since
rules came into force to ensure all private rented tenancies meet
Energy Performance Certificate (EPC) Band E, but the UK Government
is now proposing going to Band C by 2025.
This further increases the urgency to which support for retrofit
needs to be enacted. The housing stock in Wales is the oldest in
the UK with many properties dating from pre-1919, and of single
wall construction. Both the Welsh Government and the UK Government
must understand that private landlords and homeowners have little
access to funding outside of their own income to make high-cost
energy efficiency improvements to their properties. Consequently,
ambition and setting targets for improving energy efficiency are
meaningless if opportunities and support are not offered to achieve
them.
The role of sector specific retrofit targets to help drive
change
- The
introduction of sector specific retrofit targets must account for
the diversity in housing stock across Wales including in urban and
rural areas. Well-insulated property is very energy efficient and
will need very little additional heating and cooling, but housing
stock differs from region to region. The Climate Assembly UK report
notes that, “different properties may need different
solutions – e.g. old versus new houses’ and that energy
efficiency ‘needs to be individualised – solutions need
to suit different households”.
To this end, the Welsh Government need to approach requirements for
decarbonising housing based on the properties’ age, location
and construction. This way the Welsh Government can target grants
and funding support based on the architype of a property rather
than its tenure.
Actions the Welsh Government should take to progress a programme
of retrofit for these sectors in the short, medium and long
term;
Short term
- In the
short term, the Welsh Government must do two things. Firstly,
create a long-term policy framework and route map to 2050 for
retrofitting property for the private rented and owner-occupied
sectors. The route map must provide confidence and trigger private
investment from property owners and financial institutions.
Secondly, the Welsh Government must build up the supply chain in
terms of materials and equipment as well as upskill the existing
workforce to ensure the targets set out in the long-term policy
framework can be delivered. In November 2020, it was acknowledged
by the Welsh Government that 15,000 new jobs could be created to
deliver a green low carbon economy in Wales.
Medium term
- In the
medium term, the Welsh Government must embark on a national
communications campaign for tenants, landlords and owner-occupiers.
A central part of enabling a retrofit revolution on the path to net
zero will be adequately conveying the wider benefits to homeowners
and landlords. Aside from helping tackle the climate crisis,
benefits of improving the energy efficiency of the nation’s
housing stock include the cost savings on household bills. The
views of landlords and owner occupiers will play a significant role
in the success of retrofitting – a challenge in this area
includes the readiness of homeowners and landlords to go through
the process in the first place. Whatever the benefits of retrofit
are in the long term, many people would be concerned with the more
immediate and medium-term impacts on their lives. Results from
Climate Assembly UK’s findings into public perceptions of
retrofitting homes showed that, in addition to the costs involved,
major concern lay with the scale of disruption they would
experience throughout the process.
Long
term
- In the long term, the Welsh
Government must do three things. Firstly, create customer demand
for retrofitting by introducing a mechanism for landlords and owner
occupiers to understand building renovation plans for their
properties. This should include linking incentives to retrofit with
other works or points of major renovation at a property. Secondly,
introduce sustained finance through grants and delivery programmes.
Thirdly, create and enforce an industry culture that ensures all
jobs are done to high standards.
The key challenges
of delivering a programme of retrofit within these sectors,
including financial, practical and behavioural, and action required
from the Welsh Government (and its partners) to overcome them;
- We
believe there are four challenges of delivering a programme of
retrofit within these sectors. Firstly, in areas with low-viability
properties the greatest challenge is with incentivising landlords
and homeowners to take up the task of retrofitting their
properties. Retrofitting, and the prices involved in doing so,
remain the same regardless of geography. However, what does not is
the value of property. Putting this into perspective, the same
energy efficiencies demanded by the transition to a net zero
economy, including wall insulations and heat pump fittings, will
need to be undertaken to an equal extent in a terrace house located
in Ebbw Vale with an average house price of £115,972 as one
in Cowbridge with an average price of £461,417. Given the
costs of retrofitting are in the tens of thousands, if the
challenge of how to effectively to support retrofit properties in
low value areas is not met, a divide risks being created. Secondly,
there is the challenge of boosting local economic growth and place
prosperity through providing opportunities for high-skilled green
jobs as well as boosting local SME involvement in retrofit.
Thirdly, there appears to be low awareness of current and past
retrofit targets, as well as a lack of clear and concise
information on how to meet these targets and the support available
in doing so. Fourthly, there is a split incentive in that because
landlords do not pay energy bills themselves, they do not benefit
directly from the energy savings that would justify undertaking the
task of retrofitting. Adding to this are the high upfront costs,
which significantly impacts those landlords owning properties with
lower value.
Action required
- There
are three actions the Welsh Government and its partners can take to
help overcome these challenges. Firstly, provide clearer incentives
and long-term clarity on timelines to ensure retrofitting can be
achieved in the private rental sector and for homeowners. For
example, Rent Smart Wales
have a knowledge of the makeup of the private rented sector in
Wales. They are ideally positioned to build on the best practice
from Welsh Government’s Optimised Retrofit Programme and
produce a map of the skills and work required to retrofit the
private rented housing stock in Wales. Secondly, provide details of
a localised funding mechanism for retrofit to help authorities in
areas with low-viability housing achieve targets. For instance, the
Development Bank of Wales
could provide loans, learning the lessons from the Green Deal that
interest rates are not set too high and that the savings from the
works should contribute towards the loan repayment. Thirdly, the
strategy the Welsh Government takes to retrofit the private rented
and owner-occupied sectors must be coordinated with planning
decisions and form part of a joined-up approach to the
nation’s housing stock.
How the
right balance can be struck between influencing/incentivising
homeowners and private sector landlords to retrofit their
properties and regulating to increase standards to drive
progress;
9.
We believe that the right balance can be struck by taking a
localised approach to tackling the retrofit challenge. This way the
Welsh Government can develop a place specific understanding of the
requirements for retrofit and identify opportunities to support
homeowners and private sector landlords as well as upskill and
retrain the local labour market to enter this market and emerging
low carbon markets that will be a cornerstone of the net zero
economy.
How effective the
Welsh Government is influencing decisions on reserved matters to
support decarbonisation of these sectors.
10.
It is difficult for the Welsh Government to influence decisions and
policy led by the UK Government such as the energy efficiency
regulations. However, we urge the UK Government and the Welsh
Government to continue to communicate and work together to provide
solutions that account for localised needs.