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Environment

Private renters fear landlords won’t claim grant to upgrade boilers and cut energy costs

Campaigners say the costs of insulation and installing heat pumps may leave private renters without clean, cheap energy.

Homeowners can soon apply for government grants of £5,000 to replace their boiler with eco-friendly heat pumps, benefiting from greener heating and cheaper energy costs. 

But while that’s good news for wealthy households, environment and housing groups have warned that “relying on landlords” to pay for costly improvements will leave renters most in need of cheap energy facing fuel poverty.

Higher gas prices and a £5,000 grant won’t go far enough to “get landlords putting basic insulation in their properties, let alone installing the newest technologies,” a spokesperson from campaign group Generation Rent warned. 

Friends of the Earth said the grants will “only incentivise the best-off households”. 

The heat pump grant scheme was announced earlier this week as part of the government’s “heat and buildings” plan to decarbonise the UK’s housing stock – currently contributing around a fifth of the country’s carbon emissions.

The pumps are a greener alternative to gas boilers, and provide cheaper energy over time – but homes must be properly insulated with features like double glazing for them to work effectively.

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Millions of rented homes have poor energy efficiency, and the costs of upgrading them have not been adequately addressed by the government’s grant scheme, the Environmental Audit Committee said.

“As yet, there is little acknowledgment that effective use of heat pumps requires buildings to be properly insulated.

“Our committee’s evidence highlighted that insulation costs can double the current cost of a heat pump for many of the 19 million homes that are older and have an EPC rating of less than C.”

As landlords don’t benefit from cheaper energy themselves, it will be harder to motivate them to pay for improvements, Generation Rent said.

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“Private rented homes are the hardest to make greener because the tenant pays the bills but has to rely on their landlord paying for the improvements.” 

Private renters are the most likely group to suffer from fuel poverty, and represent 40 per cent of home energy use in spite of making up just 18 per cent of housing stock. 

Without better incentives for landlords, a report from think tank Localis has warned, the government’s plans to decarbonise housing stock will lead to “deepening fuel poverty”.

Currently, there is a “cost cap” on the amount landlords are obliged to pay for energy efficiency improvements to homes they own, set at £3,500. 

Landlords are expected to carry out improvements costing up to £3,500, but if retrofitting costs more than this, they can register for an exemption on improving the property’s efficiency.

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The government is currently consulting on raising the affordability cap to £10,000. Yet even with this change, the Environmental Audit Committee (EAC) warned in a March 2021 report that a “substantial” number of homes will fall outside the government’s definition of “affordable” for retrofitting. 

“Given the high average cost estimates for retrofitting properties in Leeds and elsewhere in the north of England, the homes reckoned in the estimates we describe above would not meet the government’s affordability and cost effective criteria. 

“We are concerned that, under the government’s assumptions, this is a significant number of households who will be left behind without energy efficient homes”, the report said. 

The government responded by saying that “no homes are considered out of scope as a result of the definition of ‘cost effective, practical and affordable’” but that “the measures that might be installed could vary because of constraints”. 

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A spokesperson for the Residential Landlords Association said:

“Eighty per cent of private rented households have gas central heating and replacing such systems will be both costly and vital to achieving net zero. 

“Providing grants to assist householders and landlords to install heat pumps is a welcome step, but much more is needed to make the government’s targets achievable.

“Once again private landlords have been left waiting for the government to publish details of the standards they will be required to comply with, the deadlines they must meet, and how such work should be funded.”

A BEIS spokesperson said:

“Everybody deserves to live in a decent and safe home and our reforms to the rental sector will deliver a fairer system for all. The Heat and Buildings Strategy includes measures that landlords will be able to make use of, in order to help meet their obligations as well as benefit their tenants.

“This is part of the comprehensive action to drive down emissions, as part of setting a path to net zero and comes alongside our commitment to improving as many private rental homes as possible to EPC band C by 2030 where practical, affordable and cost effective.”

The Department for Levelling up, Housing and Communities has been contacted for comment.

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