Five times as many owner-occupiers have received energy efficiency grants than private renters, despite households in fuel poverty being almost as likely to be in a private rented home than one they own
Since 2010, fuel poverty has fallen by 35% among owner-occupiers and by 54% among council tenants, but by just 4% for private renters.
We are calling on the government to give private renters better protection from eviction and rent rises to ensure that they enjoy the benefits of energy efficiency funding and so have a stronger incentive to apply for grants.
One in four private renters (24.1%) lives in fuel poverty, a higher rate than any other tenure. In total, 1.19m private renter households are fuel poor, compared with 1.33m owner-occupied households, which represent a much smaller proportion, 8.8%, of their tenure.
Energy efficiency measures that bring a home up to EPC Band C will lift a household out of fuel poverty. In 2020, the government consulted on a proposal to raise Minimum Energy Efficiency Standards for private rented homes from Band E to Band C but has still not confirmed if this will go ahead. Last week the government said it wanted to relax the timescales landlords had to meet – but we argue that shouldn’t be necessary.
The main source of funding to retrofit homes is the Energy Company Obligation (ECO) where households on low incomes, usually in receipt of benefits, can access grants to install insulation and other measures. But since the scheme’s introduction, owner-occupiers have enjoyed the lion’s share of the grants, 1.65m, or 69.9%, despite accounting for just 40.9% of fuel-poor households, while private renters, with 36.6% of fuel-poor households, received just 330,000 ECO grants, or 14.0% of the total.
A major obstacle to take-up of grants in the private rented sector is poor security of tenure, which allows landlords whose properties are upgraded to raise the rent, cancelling out any energy bill savings, or evict the tenant in order to sell the improved property. While the Renters (Reform) Bill aims to improve protection for tenants from arbitrary evictions, it will still allow these practices so tenants will still have little incentive to apply for a grant.
We are calling on the government to amend the Bill to protect tenants who receive an energy efficiency grant from:
– eviction on “landlord need” grounds, such as sale, for at least six years, which we estimate to be the time it would take for the average grant to translate into energy bill savings; and
– any increase in rent that reflects the improvements that the grant made to the property when assessed by the First Tier Tribunal.
Landlords should also be required to raise the energy efficiency rating of their properties to C, to oblige them to accept grant-funded works to their property.
These measures will allow tenants to enjoy the energy bill savings of the improved property, giving them a stronger incentive to apply for a grant in the first place.
The money that is supposed to tackle fuel poverty is bypassing the people who need it the most. Although there is squeamishness about handing money to landlords who stand to make a profit, the longer the grants system fails to work as it should, the longer tenants suffer and the further we are from meeting climate targets.
With measures to make sure the financial benefit of grants goes to the tenant, by preventing evictions and rent increases arising from the home’s improvement, we can slash carbon emissions and jump-start improvements to renters’ living standards.
Read our full report here