Government delay to insulation could cost private renters £1bn in energy bills

However, there has been no response to this consultation to date, meaning the more than 2.4 million privately rented homes in England that currently fall below EPC band C could be facing higher bills for longer. New analysis from the Energy and Climate Intelligence Unit has found that a two-year delay to implementing these proposals could cost bill payers more than £1bn under a medium gas price scenario [2].

Standards of housing in the private rented sector are among the worst of any sector. Almost one in four households (23%) are classed as ‘non-decent’, which is roughly double that of the owner occupier and socially rented sectors. A similar proportion (24%) of households live in fuel poverty, higher than the social rented sector (19%) and owner occupier (9%). Over half (56%) of privately rented homes fall below EPC band C, which is much higher than the socially rented sector (31%) [3].

A recent Citizen’s Advice report found that 1.6 million children are living in privately rented homes that are cold, damp or have significant mould. The research also shows that private renters in homes rated EPC D-G were 73% more likely to experience damp than those in homes rated A-C, and they were also 89% more likely to experience excessive cold [4].

Analysis has shown that while excess cold in privately rented homes cost the NHS £1.2bn a year, the NHS saves 42p for every £1 spent on ‘keeping homes warm’ [5].

Commenting on the analysis, Jess Ralston,EnergyAnalystat the Energy and Climate Intelligence Unit, said:“Privately rented homes are often cold, unhealthy and are likely to cost the billpayer and taxpayer billions because of their poor insulation. Encouraging private landlords to invest in their properties will lift local economies while saving the NHS millions.

Questions are being asked about why something as simple as confirming a new standard is taking this long, when it could save households cash and generate growth at a time when UK growth is at best sluggish – and the Government will certainly be under pressure from landlords and tenants alike as they seek clarity.”

All PRS homes meeting EPC C in 2025 rather than 2028 could save private renters nearly £11bn by 2050. However, as gas crises occur every 10 years or so [6], a similar crisis to today in 2030 could see renters saving £3bn more, to around £14bn [7].

Aside from bill savings, investing in upgrading the energy performance of homes through measures like insulation could help to boost local economies, as previous analysis has shown that for every £1 invested in energy efficiency by Government, £3.20 is returned in GDP [8]. This could also support thousands of jobs as the installer workforce is stimulated to expand [9].

People living in privately rented homes tend to be younger than in the socially rented sector and in lower income quintiles. They are also more likely to be ‘non-white’ (14% vs 7% in owner occupied homes) and around a third (30%) have one or more household members with a long-term illness or disability [10].

A quarter, or 600,000, privately rented homes receive housing benefit, partly used to cover the costs of high rent, which in total will cost the taxpayer £14.2bn in 2022-23. Private rented households will receive around a fifth (22%) of this, or £3.2bn [11].

Analysis also shows that, if the National Audit Office’s £38bn estimate [12] for the total cost of the domestic sector Energy Price Guarantee is reached, privately rented accommodation would likely receive more than £7.5bn, over a fifth of the taxpayer funding despite being less than a fifth of households proportionately. This is as a result of poorer energy efficiency in this sector meaning that homes are likely to use more energy and therefore cost more than similar homes in other sectors.