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Tenants in illegal lets pay £321m more on energy

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03/05/2022
Hundreds of thousands of private renters are living in illegal energy-inefficient homes, forcing them to spend millions of pounds more on their bills.

A quarter of a million properties have a sub-standard Energy Performance Certificate (EPC) which mean they’re illegal to rent out.

But research from campaign group Generation Rent found they’re still being rented, and tenants are bearing the brunt of costs when it comes to covering energy bills. It said for those in the least energy-efficient homes, they can pay up to £5,000 a year for electricity and gas.

Private rentals and energy rules

Since April 2020, the Minimum Energy Efficiency Standard (MEES) have applied to certain buildings in England and Wales.

This requires buildings within its scope (listed buildings, for example, are excluded) to hold an EPC rating of between A and E.

Properties falling in the sub-standard F or G rating are illegal to rent out, and new leases can’t be created, renewed or changed as a result. Landlords are required to install insulation and efficient heating systems to get them up to spec.

Original estimates from the Department for Business, Energy & Industrial Strategy (BEIS), suggested there were around 280,000 domestic properties in the UK with an EPC rating of F or G.

And two years into the new energy rules, Generation Rent research revealed that of 4.2 million properties with an EPC, 201,000 homes recorded as private rented in England are classed as F on their EPCs, while 62,000 are classed as G.

It found South West England is the region where private renters are most likely to live in a home that fails MEES – 9% of households compared to the 6% for England as a whole.

But private renters in London are least likely to be in an illegal home, with 3.3% failing standards, followed by the North East with 4%. Private renters in the West and East Midlands have a 7.5% chance of living in a home that fails minimum standards.

Generation Rent added that as of 1 July 2020, 9,269 private rented properties had an exemption from MEES.

Energy bills up and enforcement action

Research from real estate service JLL revealed that after April’s energy price cap rise, the average energy bill for a band G property stands at £4,950 a year, while a band F tenant will pay an average £3,587.

For a home at the legal minimum of band E, the average bill comes in at £2,687.

Therefore, a landlord upgrading a band F home to the legal band E would save a tenant around £900 in energy bills, while those bringing band G properties up to spec would see renters save £2,263 a year.

Generation Rent said landlords’ failure to comply with the law is worth £321m per year.

Local authorities are responsible for enforcing MEES but Generation Rent said of 101 councils that provided information about their MEES enforcement work in 2020/21, just 13 issued enforcement notices – 359 in total.

Barnsley Council issued the most notices, with 181, followed by Bristol with 35 and Thanet with 30.

Landlords failing MEES are liable for a maximum fine of £5,000, but tenants aren’t protected from eviction if they complain. They’re also not able to claim money back to compensate for higher bills.

However, councils enforcing MEES can usually serve non-compliant landlords with improvement notices on the basis that the home is too cold to be considered safe. This protects tenants from a retaliatory eviction for six months and gives them the basis to claim back rent through a Rent Repayment Order if the landlord fails to make the necessary improvements.

With polling day on 5 May, Generation Rent is calling on councils to commit to using publicly accessible data on EPCs to identify tenants in cold homes and all their enforcement powers, including improvement notices, to protect them.

‘Too cold to be legal’

Alicia Kennedy, director of Generation Rent, said: “A quarter of a million households are in homes too cold to be legal and with energy bills through the roof, they are paying hundreds, if not thousands, of pounds more than they should as a result. People will miss meals, get ill, and fall into arrears as a result of their landlord’s negligence.

“Councils have the data and the powers they need to protect the most vulnerable tenants – but at the moment most are not using them. The government needs to act much faster to ensure that private landlords insulate their properties, including by reforming tenancies to give tenants more confidence to exercise their rights.”

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