The Scottish Government’s “Energy Efficient Scotland” programme, a national infrastructure priority which extends over the whole remit of domestic and non-domestic building energy efficiency, will have far reaching implications for the fast expanding private rented sector, which now accounts for 15% of all households.
The Government’s consultation on achieving a minimum EPC rating of C within the private rented sector by 2030 (where this is technically feasible and cost effective) will open in May. It is part of a wider goal of improving poor energy efficiency, eradicating fuel poverty and reducing carbon emissions.
Thomas Macmillan of Savills Energy said: “Nicola Sturgeon’s targets – which go beyond those set by Westminster - will have huge implications for the property sector, including planning, development, management and valuation. In many cases, achieving the required C rating is likely to be expensive and disruptive for existing building stock, which is why many property owners have been putting energy improvements on the backburner.
“However, while Scottish Government’s change of tactic, from carrot to stick, is likely to cause some property owners worry, there are real opportunities for the sector to take advantage of both the funding that is available and a buoyant development market, as in some cases selling to a developer might make the most financial sense.
“The private rented sector is fast expanding, with around 250,000 new households in the last twenty years. However, property owners will only be able to enter this market, and attract new tenants, if their homes meet new legal requirements. For clients with a portfolio of properties, an audit is recommended so that a strategic plan can be created which might include staggering improvements, change of use or disposal.”
Carolyn Davies, Savills lettings regulations specialist outlines key dates:
From April 2020 at the change of tenancy a property will need to meet an EPC E grading, and by 31st March 2022 all rented properties will need to have achieved this rating.
From April 2022 at the change of tenancy a property will need to meet an EPC D grading, and by 31st March 2025 all rented properties will need to have achieved this rating.
At the current time the route map makes no mention of how to deal with hard to treat houses, such as listed properties, or of placing a maximum cap on financial input by landlords, which had been a feature of the 2017 consultation.
Advice, grant funding in fuel poor households and interest free or low cost loans for improvements and installing renewables will continue to be offered to private sector landlords and tenants.
The Government’s ambition is that all properties in the private rented sector will need to meet an EPC C rating by 2030 where this is technically feasible and cost effective.