A mixed method research approach resulted in significant recommendations to benefit landlords and tenants.
The result of a collaborative research project carried out by the Chartered Institute of Housing Wales’ Tyfu Tai Cymru project, Severn Wye, Sustainable Design Collective and Sero, the report, entitled ‘Decarbonising the Private Rented Sector in Wales: Tackling the energy crisis to meet net-zero,’ examines the technical and behavioural solutions needed to meet targets for decarbonisation and fuel poverty reduction in the private rented sector in Wales.
The context for this research paints a stark picture of the reality of home energy in Wales, where 32% of homes were built prior to 1919, and only 6% were built in the last 35 years. There are significant challenges in dealing with the energy efficiency needs of this aging housing stock, not least the fact that with an average EPC rating of ‘D,’ Welsh homes require the largest financial investment in the UK to bring properties up to a ‘C’ rating, whilst also having the lowest average income. Alongside this, the private rental sector makes up 16% of housing stock and is the worst performing tenure.
The poor energy efficiency of private rental stock is often attributed to something called the split incentive, which essentially describes the fact that landlords don’t receive the direct financial or environmental benefits of carrying out retrofit improvements as they don’t live in the property. Although Minimum Energy Efficiency Standards now require properties in the private rental sector to have an EPC rating of ‘E’ or above and despite UK and Welsh Government targets aiming at upgrading all homes to a minimum of a ‘C’ by 2030/35, there remains an 89% funding deficit for meeting Welsh EPC ‘C’ targets. It’s against this backdrop that the research was carried out, aiming to provide solutions and rationale for pursuing these targets and making them a reality.
Severn Wye provided qualitative input into the project in the form of interviews with landlords and tenants in the private sector, exploring their experiences of energy efficiency and retrofit in their properties. The final report pulls together conclusions from those interviews, combined with a review of relevant literature, policy analysis and the production of decarbonisation scenarios for four different archetypal properties.
The interviews raised a number of core challenges to tackling the uptake of retrofit by landlords and associated issues faced by private sector tenants, including those around a lack of information, low levels of trust and communication, the impact of policy uncertainty on landlord investment and lack of eviction protection for tenants. One tenant stated that,
“So I think [landlords] can, almost, impose any conditions that they want, and they know that they’ll still get a tenant at the end of the day.”
A landlord who participated in the study reflected that,
“We don’t tend to bother [adding more insulation], you know, it was obviously someone else is paying the heating bill.”
These reflections from tenants and landlords make clear the issues faced in developing good communication in these relationships, as well as demonstrating the impact of the split incentive.
As a result of the research, the report makes thirteen policy recommendations, setting out what’s required at Welsh Government, local Government and UK Government levels, to achieve decarbonisation and fuel poverty targets for the private rental sector. Amongst these suggestions is the recommendation that the Welsh Government develop a long-term strategy for energy efficiency, fuel poverty and decarbonisation of the private rental sector, integrating this work with broader objectives around housing quality, fire safety and landlord licensing. It is also recommended that the Welsh Government engage with landlords and tenants during this process, communicating the benefits of the programme and ensuring the delivery of tailored advice and support through local hubs such as ‘One-Stop-Shops.’ Beyond these recommendations, the report recognises the need for a huge skills drive to develop the retrofit sector, which will require public investment in new apprenticeships and a Welsh supply chain for low carbon technologies.
The good news is that none of the recommendations in the report rely on waiting for emerging or untested technology solutions. The solutions to many of these energy and climate issues already exist; what’s currently lacking is the long-term political investment required to implement them. A sustainable vision for supporting retrofit is needed, not only in the private rental sector but across all areas of housing, to provide the clarity and certainty needed to stimulate investment and ensure labour and equipment supply chains are in place. To complement this, accessible finance options are essential, along with tighter regulations for Minimum Energy Efficiency Standards and enforcement when landlords don’t make efforts to bring their properties up to scratch.
Seven Wye is proud to have contributed to this timely piece of research and hope to see these recommendations considered and implemented not only in Wales, but across the UK.
