Lagging Behind? – energy efficiency in low viability properties

Work in progress

Lagging Behind? – energy efficiency in low viability properties

The national political context:

There is much riding for the Government on the back of its ‘Building Back Better’ agenda as a ubiquitous mantra.  Equally, having set in law the world’s most ambitious climate change target to cut emissions more than three quarters of the way by 2035 compared to 1990 levels, government departments are being commissioned across Whitehall to inform the ambitious cross-government  Net Zero Strategy which is to be published ahead of COP26 in November.

So all seems good as far as ambitious pronouncements on the way to attaining Net Zero status by 2050.

Fully decarbonising means replacing inefficient heating and cooling systems which currently use more than half the building’s energy. Buildings must break away from fossil fuels and increase efficiency through insulation, district heating or heat pumps.   In advance of going full speed to decarbonisation, however, there is much to be done in the short to medium term. BEIS has policy levers to improve energy efficiency in the private rented sector, including enshrining minimum EPC ratings of C for new tenancies from 2025 and existing ones from 2028 with a cost cap of £10,000 per property and further measures will be enacted from fabric to heating systems.

But building back better risks remaining a vapid if effective slogan if we don’t address the challenge of how we go about retrofitting huge swathes of existing housing stock in left-behind parts of the country where the need isn’t as great a need to ‘build, build, build’ as to ‘improve, renovate and futureproof’ what exists already.

This will mean, in practice, bridging the often significant price differentials between what exists in properties that are otherwise more or less identical in more prosperous and left-behind parts of the country.  The same energy efficiencies demanded by Net Zero targets – external and wall insulation, windows and insulation – will need to be equally undertaken in a two-bed terrace in Barking worth £350,000 as one in Burnley valued at £50,000.  And the average cost of upgrading a property to EPC A ratings – upwards of £35,000 – remain the same regardless of property value.

The policy problems are manifold:

  • In properties of low value, private rental landlords are unlikely to have either the rental income or equity to finance upgrades to Net Zero energy efficiency.
  • Homeowners in such areas on low income have no incentive to fund expensive improvements that add no value to the property.
  • So we risk creating within our neighbourhoods a stark local divide between private rented and privately-owned homes, and between those that are upgraded to Net Zero energy and heating standards, and those whose fabric is not upgraded with the prospect of residents facing higher fuel bills and deteriorating fabric.

Fuel poverty

This is a key moment for those 3.2 million households still suffering from fuel poverty, with the government currently deliberating over how to improve the next phase of its fuel poverty alleviation and aligned programmes and regulations.

So while fuel poverty remains a problem that is being targeted as a social measure, environmental and net zero ambitions, which will entail improving the fabric of buildings to reduce consumption will continue to have an impact on fuel poverty overall as long as gas remains cheaper than electricity.  This begs the question as to what do we now have to do differently to align the social with the environmental.

Making the place-based case

Across large parts of post-industrial England, average house prices remain well below the national average at around £100,000 – with prices often set by local housing allowances for the rental market.  Common housing types in such areas are those which predate the first world war, are single wall post-1945 build or terraced properties.  On account of their low value, these properties have historically not enjoyed much by way of investment for improvement and renovation.

Localis is undertaking a place-based analysis to investigate energy efficiency research in hard-to-reach properties within ‘red wall’ seats in advance of the long-awaited and much-delayed autumn spending review, which will set multi-year public finance settlements.

Ultimately, we will devise a suite of localist policy recommendations that take in the entire ambit of the challenge of meeting Net Zero energy efficiency targets in low value properties in ways that align with:

  • the decarbonisation promise of ‘clean growth’ and;
  • the beneficial social impact of ‘good growth’ for local economic health and overall place prosperity and wellbeing.

With this in mind, Localis will first identify the scale of the issue and define the areas which are home to most low-value properties.

In this work, Localis is also identifying policy levers at national, local and industry level that could facilitate the work being undertaken in the most cost-effective manner.

For example, how can local government’s strategic planning and placemaking role be set in motion to create a plan for affected areas based on local knowledge of area, property types and in line with future spatial strategies?  Would the ability of local authorities to zone certain areas for district heating be viable and what would a whole-street approach look like?

Research kindly sponsored by: