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DCLG change to requirement for EPCs for holiday lets is a setback for DECC

As DCLG issues new guidance potentially removing the requirement for EPCs for holiday properties the job gets harder for DECC

The ability of government to join up their policies has to be questioned when departments are clearly working against each other. The Department for Communities and Local Government (DCLG) has announced alternative guidance on the requirements for EPCs for holiday properties, taking many out of the requirement for an EPC. This is despite the fact that the regulations have not changed so what amounts to a reversal in the guidance, appears to indicate that either the new guidance is wrong, or the previous guidance was.

Holiday properties are fairly unique in that the energy cost is usually paid by the owner and included in the rental. This means that the holiday maker has no financial incentive to be economical with their energy use. It is in the owner's interest to make the property as energy efficient as possible to reduce the amount of energy the occupiers can waste and therefore minimise the owner’s costs.

With many holiday properties being older and relatively energy inefficient, the upgrading of these is critical to the Department for Energy and Climate Change (DECC) achieving the reduction in carbon emissions from buildings it is seeking. DECC is working hard to meet these targets and there is potentially significant financial penalty for the UK, as well as the on-going energy cost and environmental impact if the targets are not met.

One of the arguments against EPCs being an effective tool is that generally they are produced on sale or rent for someone who is ceasing to own and/or occupy the building and is not likely to act on the recommendations. Their value relies on the incoming person looking at the information it contains. With holiday lettings the EPC is produced for someone who owns the property, will continue to own the property, has the ability to carry our recommended measures and most importantly has a significant financial incentive to do so. They should therefore be the most likely to result in positive action.

A flagship policy for which DECC is responsible is the Green Deal. This will become a major driver for improvement of energy efficiency in UK domestic properties and it is based upon the energy rating and the recommendations on the EPC. If DCLG are going to exclude holiday properties from EPCs they are watering down the impact of the Green Deal when it launches. There is also a policy intention to require owners of energy inefficient properties to raise them to a minimum standard in order to be able to let them. If DCLG are going to take a large proportion of rented properties out of the EPC regime they also take away the ability of DECC to target the inefficient ones for improvement.

The above shows two clear reasons why not requiring EPCs for holiday properties would be a major own-goal in terms of the governments' expressed intention to be the "greenest ever". It sets back two policies intended to address the energy consumption and carbon emissions of the existing housing stock and makes meeting the carbon emission reduction targets harder.

What then is the purpose of this change? The excuse is probably that red tape is stifling small business, most holiday properties are owned by small businesses so this good for the economy.   But hold on a minute; isn't one of the ways the government is trying to boost the economy by creating thousands of new ‘Green’ jobs carrying out energy efficiency measures to these properties (that it is no longer encouraging the owners to carry out)?

Another desire of government is to get the economy growing by encouraging people to spend. One of the best ways must be to get people who have money tied up in investment properties to spend some on investing in those properties thus creating employment and getting the economy moving. With the spin off benefit that it will reduce carbon emissions from those buildings and increase our energy security by lowering demand that has to be a win-win situation. This is exactly the support DECC need, and it is exactly the opposite of what DCLG are doing.

So what is the answer? Well the so called "red tape" burden on holiday home owners is not the one off purchase of an EPC. It is the need to supply an EPC to potential holiday makers when the industry is geared around the marketing of a holiday property in a brochure listing the size of a business card.

Incorporating the EPC into the marketing of a property that changes hands every few years is no great administration burden. Adding it in to the marketing of a property that changes occupier every week is a totally different scale of challenge and it is no wonder the holiday industry rebelled against it. Since the benefit of the EPC for holiday properties is mainly for the owner, a small box on the listing showing the energy rating (A-G) would be enough for the environmentally conscious holiday maker to make an informed choice. This would sit next to the other boxes indicating number of beds, whether pets are accepted etc. It would have been a simple modification that would not have troubled anybody. Instead we have the baby disappearing along with the bath water.

22 Nov 2011

Ian Sturt DipHI, DipNDEA(L4), Dip DEC

HI Devon Energy Assessment

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