Local Government and Communities Committee

Meeting date: Wednesday, February 26, 2020

Official Report 621KB pdf

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Subordinate Legislation

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Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations 2020 [Draft]

Agenda item 3 is consideration of an instrument that is subject to affirmative procedure. First, the committee will take evidence on the instrument. I welcome the Minister for Local Government, Housing and Planning, Kevin Stewart, who is accompanied by Karen Major, who works in the Scottish Government on private rented sector regulations, and Norman Macleod, who is a senior principal legal officer in the Scottish Government.

The instrument is laid under the affirmative procedure, which means that the Parliament must approve it before the provisions can come into force. Following the evidence session, the committee will be invited to consider the motion to approve the instrument. I invite the minister to make a short opening statement.

Thank you for the opportunity to give evidence on the draft Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations 2020.

Our programme for government included a commitment to introduce minimum standards for the energy efficiency of homes in the private rented sector that are to be let out for new tenancies from 1 April 2020. The regulations fulfil that commitment using provisions of the Energy Act 2011 that have been in force since 1 July 2019. In drafting the regulations, we have also drawn on the responses to a number of public consultations, the most recent of which was held last summer.

The standards that the regulations establish will make an important contribution to the removal of poor energy efficiency in the private rented sector, which is a driver of fuel poverty. With the most recent figures, for 2018, showing that 36 per cent of households in that sector are fuel poor, the importance of taking that action is clear.

The regulations also flag the wider expectation of the energy efficient Scotland programme to introduce standards for energy efficiency across all building stock in Scotland. Further to standards that have been set in the social sector through the energy efficiency standard for social housing—EESSH—they herald another important step for the 20-year energy efficient Scotland programme. The standards that are introduced will be phased in over five years and will use the widely recognised energy performance certificate as the yardstick for energy efficiency.

From 1 October 2020, there will be a prohibition on the letting of new tenancies that fall below EPC band E. That standard must then be met by all tenancies by 31 March 2022. From 1 April 2022, the standard will increase to EPC band D—again for new tenancies first. By 31 March 2025, all private rented properties will be required to meet the EPC band D standard.

The regulations allow for various exemptions to the standard to take into account individual circumstances and the variety of building stock found in the private rented sector. Examples of those include the cost of the works exceeding £5,000 for each standard set; a sitting tenant or third party refusing to allow the required works to take place; and the likelihood that the necessary works would have a negative impact on the fabric or structure of the property.

We will work with stakeholders to finalise non-statutory guidance to support the roll-out of the changes. If the committee recommends approval of the regulations, my officials will publish draft guidance on 1 April, which will be used as a platform for conversations with local authorities and landlords during the spring of 2020.

The regulations introduce minimum standards for energy efficiency in the private rented sector. The approach will help to ensure that private tenants are able to live in homes in which they do not have to trade off paying for heating with spending on other basic needs.

I apologise for my croaky voice.

Thank you, minister. I invite questions from members.

You mentioned a cost cap of £5,000. Was consideration given to regional variations in the cap? Here in Edinburgh, for example, a third of tenants live in pre-1919 tenements, to which it is probably relatively more expensive to introduce energy efficiency measures than it is to introduce measures to homes in other parts of the country.

No, we have not looked at regional variations to the £5,000 figure. Many parts of the country have pre-1919 tenements, as Edinburgh does—my constituency is one of those places. From my knowledge of the Victorian tenements project in Aberdeen, I think that some requirements to do things to such buildings will fall within that figure, without a doubt.

As I always say to the committee, we will continue to keep an eye on all that. If we think that there is a need for variation in the future, because folk are falling through the net, we will look at the situation very carefully indeed.

It is not clear from the regulations whether the exemptions register will be separate from the existing landlord register. Will it simply be a case of adding fields to the existing database?

I will bring in Ms Major to answer your question.

There will be a separate register, because the existing landlord register is based on landlords, not property. The exemptions register will be based on property and will be a separate thing that is held by each local authority.

Was thought given to amending the existing register so that people could go to just one register?

We are looking at the existing register, the functionality of which is very basic. I think that adding the function that we are talking about would have caused difficulty. I assure the committee that we are reviewing how the current register operates to see whether other functionality can come into play in the future to deal with a huge number of aspects.

There will be an exemptions register, but will there be a register of properties to which energy efficiency measures have been applied?

There will not be such a register. I think that, as we move forward, we will get a huge list of the reasons for exemptions, and I expect that others will meet the standards.

A property will be exempt if the costs exceed £5,000. How will that be assessed? Will it be done through quotes? I can see quite a bit of scope for creative quotes coming in at £5,001.

I assure the committee that we will keep an eye on any creativity that goes on. I stand to be corrected by Ms Major when I say that we reckon that, at the beginning, the average change will cost in the region of £1,140, so folk will be being very creative indeed if they exceed the number.

That said, as I have said to the committee previously, it would be very difficult to introduce measures to some properties because of the nature of the buildings. When I was questioned about EESSH previously, I gave the example of Napoleonic council housing in Orkney, which is from the late 18th and early 19th century. Those buildings could not be externally cladded, and nothing could be done internally because the size of the rooms would be reduced dramatically, but folks are happy with that. We have to realise that we have some old buildings that we do not currently have the technology to deal with. Such buildings fall into the category of those beyond the £5,000 cap. In some cases, not a huge amount can be done. However, I assure the committee that, as we move forward with the energy efficient Scotland programme across the board, we will do all that we can in all sectors and across the country to make our homes more energy efficient, to reduce fuel poverty and to curb our carbon emissions.

I welcome the draft regulations, but I want to ask about a couple of issues. First, I see that you have had conversations with the Convention of Scottish Local Authorities and individual local authorities. What additional resources will be required to carry out the regulatory enforcement? Will that work be covered by existing local authority officers, or will new people be recruited to ensure that the enforcement works in practice?

The second issue is investment. To what extent will the improvement work feed into the area-based schemes that currently exist?

I would never dictate to local authorities how they should handle such issues. In this area, as in many others, we are committed to working with local authorities. We are in the process of setting up formal governance arrangements with COSLA and the Society of Local Authority Chief Executives and Senior Managers to oversee strategic planning of the energy efficient Scotland programme.

Ms Boyack is well aware that, as it stands, our home energy efficiency programmes for Scotland area-based schemes—HEEPS ABS—are managed by local authorities. I can see the work that we have been talking about fitting in well. Local authorities in certain parts of the country have made great efforts to ensure that owner-occupiers and landlords enter into the HEEPS ABS programmes that are available. They are quite persuasive in ensuring that folk know that they have access to loan funding to carry out works.

Beyond that, as I have said to the committee previously, I am clear that all of us need to be more proactive—I know that some local authorities are proactive—in ensuring that owner-occupiers and landlords who choose not to access the schemes are told that, by not doing so, they will cause themselves possible difficulties in the future, not only by not complying with the changes but in relation to selling on their properties. I have given the example of Cadder, which is an area in the north of Glasgow that has benefited from the HEEPS ABS programme. However, certain folks chose not to participate, and there was a stark contrast between the prices of properties that entered the programme and the prices of those that did not. We need to get over to folks that by not entering into the HEEPS ABS programme when they have that opportunity, they might cause themselves liabilities in the future.

I do not know whether I covered all the bases there.

09:15  

You covered energy efficient investment schemes. This is an opportunity to highlight the fact that there are such schemes, and it is critical that the regulations tie into them.

My question was not about instructing local authorities; it related to your comment on the need to ensure that the timescale works and that local authorities are capable of gearing up. Are you happy that the local authorities are ready to gear up? Will it be new staff or current staff who deliver the enforcement?

We have not had anything back from local authorities to say that they would have any difficulties. As I said in my opening remarks, we have the period between the publication of the guidance on 1 April and implementation on 1 October to talk to local authorities and stakeholders. In my dealings with folk at COSLA in relation to the energy efficient Scotland programme, I have heard that local authorities are up for the changes.

As I have said, we will put in place formal governance arrangements to ensure that we deliver in partnership with local authorities the energy efficient Scotland programme, which is important and strategic.

Good morning, minister. Do you have any idea of the number of properties that might be involved?

Gosh. If Mr Simpson bears with me, I will try to find those figures in the vast array of documentation that I have in front of me. Here we go—that is efficiency for you.

As the committee is aware, the regulations will cover properties that have an EPC and whose tenancy is covered by the repairing standard. The most recent Scottish house condition survey identified 26,000 such properties that are in EPC bands F and G, which is about 10 per cent of the private rented stock. Those are the houses that will be affected by the first wave of regulation. A further 42,000 properties are currently in EPC band E, which is 16 per cent of the total private rented stock. Those houses will be affected by the second wave of the changes in April 2022.

So it is 66,000 properties.

By my calculation, that is 68,000 properties.

Yes—you are right. That is a lot of properties. That takes me back to a previous question. Do councils have the resources to monitor all of that? It seems quite a big extra workload.

From my experience of talking to folks who deliver HEEPS ABS programmes in local authorities and some of the other energy efficiency schemes, there are folks who are really expert in all of this in many places. As I have said—in committee or perhaps in Parliament—what we have seen from HEEPS ABS thus far is that many local authorities have concentrated on the low-hanging fruit. I know that local authorities are looking at moving further forward in improving energy efficiency in various places and are looking more to the private rented and owner-occupied sectors and at getting them involved. This is part of that work. We have seen local authorities in many parts of the country bringing together not only the HEEPS ABS resources but other resources from elsewhere to deliver across the board. Although the regulations add to that work in some regards, in reality, in many places the local authorities are doing it anyway.

How will a landlord or landlady know that they need to do work? How will that be communicated?

We are going to embark on communication starting from 1 April and talk to folks up until the 1 October trigger date. We will use all means possible to communicate the changes, including the good offices of the Scottish Association of Landlords, which is key in helping us to spread the message far and wide.

Beyond that, we will look at how we can communicate the changes to tenants through various organisations such as Shelter, so that they know what their rights are. They will also know whether their landlord is not fulfilling the obligations that are laid out in the regulations.

I have a final question. I can picture the scene in which work is done on a property, but the rent is put up as a result of the landlord spending money. I am sure that that is not the kind of outcome in some parts of the country—probably all parts of the country—that you are seeking.

That is a possibility, but I would hope that, in such circumstances, landlords would take cognisance of the situations that folk find themselves in. We also need to look at the whole cost to the resident. It might well be that, in some cases, there is a fair saving to be made in energy bills by carrying out only a very little amount of work.

As there are no more questions, we will move on to agenda item 4, which is formal consideration of motion S5M-20854. I invite the minister to speak to and move the motion.

I will simply move the motion.

Motion moved,

That the Local Government and Communities Committee recommends that the Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations 2020 [draft] be approved.—[Kevin Stewart]

Motion agreed to.

The committee will report on the instrument in due course. Does the committee agree to delegate authority to me as convener to approve a draft report on the instrument?

Members indicated agreement.

09:22 Meeting suspended.  

09:26 On resuming—