Lord Best
Main Page: Lord Best (Crossbench - Life peer)
Lord Marland
My Lords, this second group of amendments covers the private rented sector, the energy company obligation and the Home Energy Conservation Act. For convenience, I will speak to Amendments 33 to 72 and Amendment 104 as a group.
During the early stages of the Bill, many noble Lords tabled amendments in the House for stronger provisions to improve the energy efficiency of the private rented sector. I acknowledge the leadership shown in this by the noble Lord, Lord Best. During the Bill’s passage, the sentiments underlying those amendments were shared by many in another place and by a wide range of interest groups who made the case for a clearer and firmer regulatory position. We have listened carefully to those arguments and, through amendments in the other place, have responded to them.
Amendments 37 to 39, 44 and 47 remove the provisions from the Bill which required a review of the private rented sector by April 2014. The review has been omitted to send a clearer signal that we want action to address this problem. We have also made it clear that there is a duty on the Secretary of State to make regulations.
However, with the regulatory certainty generated by the omission of the review provisions, we need to give the sector longer to prepare. Therefore, from April 2016 instead of April 2015, all domestic landlords should not unreasonably refuse a tenant’s request for consent to have relevant energy efficiency improvements where there is finance available under the Green Deal and the ECO. Amendments 45 and 46 make these changes.
The current provisions for the domestic energy efficiency regulations were removed and we sought new regulation-making powers to introduce a minimum energy efficiency standard for the domestic private rented sector, as provided for in Amendments 35 and 36. Under these new provisions, from April 2018 landlords will not be permitted to rent property unless it has an E or above, or they have done the maximum package of measures under the Green Deal or ECO—even if that still does not take them above F. This is a clearer legislative position for both landlords and local authorities, as the enforcement body, and is similar to the current provisions in the Bill for the non-domestic sector.
Amendments 48 and 51 impose a duty on the Secretary of State to make the non-domestic regulations and change the date for regulating from 1 April 2015 to 1 April 2018, in line with the domestic provisions. Under these new provisions, we remain committed to minimising the regulatory burden on landlords. Amendments 54 to 69 relate to Chapter 3 and the Scottish private rented sector provisions, and reflect the differences in Scottish parliamentary procedure.
A number of additional amendments are very minor or technical. These include Amendments 33 and 34, 40 to 43, 49 and 50, 52 and 53, 72, and 125 and 126. I will not take up your Lordships’ time with these. Amendment 104 is to enable the Secretary of State to require local authorities to report on their engagement with the Green Deal and ECO. Scottish and Welsh Ministers have decided to continue with the repeal of HECA. I beg to move.
Lord Best
My Lords, I shall speak to Amendments 35A to 35E. I fear that some of the excitement of this debate may be lacking, as I recognise that it would be very bad form for me to press any amendment to a vote on a night when so many from the government Benches are away at their party conference. However, I feel sure that I would not in any case be tempted to divide the House since the Minister has, throughout this Bill's progress, been extremely helpful in recognising and responding to the suggestions made within—and, indeed, outside—your Lordships’ House.
During the Bill’s passage through this House, I moved an amendment to secure improved energy efficiency in the worst of the properties in the private rented sector. My amendment was promoted by Friends of the Earth and the Association for the Conservation of Energy, alongside a consortium of a large number of voluntary bodies— from Citizens Advice to National Energy Action and from Age Concern to the Chartered Institute of Environmental Health. The amendment aimed to make it compulsory for landlords to improve the properties with the very worst energy efficiency ratings to a minimum standard before letting them. This would address a serious problem in the private rented sector where there are 680,000 properties with the worst energy ratings of F and G. These properties are wasteful of energy, create fuel poverty for their occupants and represent a hazard to health. The private rented sector has a special problem in this regard because the owners of the property do not pay the fuel bills and may have little interest in upgrading energy standards.
The Minister was very receptive to the arguments put forward, although my amendment was not pursued by the Government during the Lords stages of the Bill. Indeed, there was widespread support for a new law outside that would ensure that tens of thousands of vulnerable households are saved from the poverty brought on—unnecessarily, when remedies are at hand—by huge heating bills following big hikes in the price of electricity and gas over recent months. I was very pleased that the Government tabled an amendment to the Bill in the Commons Committee, as the noble Lord has explained. It is the changes to this Commons amendment that we are now debating. In essence, Ministers have taken on board the principle that, to quote the right honourable Chris Huhne, the Secretary of State,
“the rental of the very worst performing properties—those rated F and G—will be banned through a minimum energy efficiency standard”.—[Official Report, Commons, 10/5/11; col. 1064.]
That is very good news and a credit to Ministers in both Houses for taking this matter forward.
However, the Commons amendment has some deficiencies in the opinion of the expert groups involved and my amendments seek to overcome them. I am hopeful that the Minister will be able to provide reassurances on most, if not all, of these points. The changes I am suggesting here are relatively straightforward. First, there are two proposed changes to subsection (1) of the proposed new clause so that as well as placing requirements on landlords, the legislation should cover letting and managing agents. It was estimated by the Rugg inquiry on the private rented sector that some 60 per cent of properties were in the hands of agents, often with the landlord being an investor rather than a hands-on participant in the process. With day-to-day management in the hands of agents in so many cases, it seems important for the Bill to cover those who are acting on behalf of landlords, so these amendments extend the legislation to appointed agents and make it an offence for them to let or indeed market the properties below the F or G energy rating. My amendment to subsection (4) ensures that there is a proper definition of marketing in regulations. If the Minister believes that other regulations achieve this without the need for my amendment, I know that he will explain that to the House.
I have some knowledge of managing and letting agents in the private rented sector, not least in my role as chair of the Property Ombudsman Council, which considers complaints against agents from both tenants and landlords. A good letting agent is a real asset but not all are perfect and it seems important, since so much privately rented property has been placed by absentee landlords in the hands of agents, that the Bill covers them too. I am hoping that the Minister will confirm that existing regulations can be used to ensure that landlords as well as tenants will be covered by the obligations in the Bill.
Secondly, the amendment to subsection (2) simply tightens up on the definition of the standard which the property must achieve—that is, above the abysmal F or G rating. I am hopeful that this is not a controversial point since I know it is the Government’s intention that the energy efficiency of privately rented properties should be raised above the F and G level. The problem with the wording of the Commons amendment is that there could still be some privately rented properties which fail to obtain an E rating but which could still be deemed to comply with the legislative requirement because the landlord has made some improvements. They may be using Green Deal funding, perhaps topped up with special ECO finance, even though these properties have failed to achieve the minimum standard.
This loophole would create a category of legally let F or G-rated properties. Such a situation would lead to real compliance difficulties for tenants, landlords, agents and the local authorities who will be doing the enforcing. It would not be clear whether the minimum standard for letting had been achieved. If there are to be exceptions to the rule so clearly announced by the Secretary of State—I think a case could be made in the rather obscure instances of private letting of grade 1 listed buildings, for example—then surely such exceptions will be spelt out in the regulations. Obviously, the straightforward ban on the rental of properties rated F and G is what the Government intend and my amendment would make the position clearer.
Finally, the amendment to subsection (6) substitutes 2016 in place of 2018. Although I am not entirely clear why, the date for compliance in the original amendment I tabled for all the environmental organisations and consumer bodies was changed from five years hence to seven years hence when the Bill was amended in the Commons. I hope that the noble Lord will be able to give me some reassurance on the arrangements here. It happens that 2016 is also the deadline for all new homes being built in the private and social sector to achieve the higher standards of energy efficiency required by the Code for Sustainable Homes—that is, to level 5 or above. While I understand 2016, I am not clear on why the extra two years are to be deployed in this case.
As in all such cases, we can be sure that the most recalcitrant and inefficient landlords will leave everything to the last minute, meaning that we would have to wait for a full seven years from today for action to be taken in a lot of serious cases. I know that many felt that a starting point of five years hence was taking the matter too slowly. Some older people living in cold and draughty properties and paying huge amounts for their heating will not be comforted by knowing that things will not change for five years. A seven-year delay really does sound a bit feeble. I know that there is an aversion in some parts of government to introducing any regulation which could affect the private landlord for fear that, with the decline of social housing, the sector might contract. However, private renting has been expanding rapidly. Rents are still rising in most areas and the costs of improving energy efficiency to above the F and G levels is not likely to be a deterrent to letting. Research by the Energy Saving Trust for Friends of the Earth puts the cost at under £900 for 37 per cent of the offending properties, and less than £3,500 for three-quarters of these homes. Moreover, landlords will have access to the Green Deal and to assistance, where costs are higher, through energy company obligation finance.
If there are properties where, despite all the Government's help and encouragement, the landlord feels the obligation is still too burdensome and sells them either to another landlord with a better business plan or to owner-occupiers who are keen to do the places up, this would not seem to be a bad thing.
I know that the Minister has worked hard on these matters and I am confident that he will be able to give us, and all the many interested parties, some reassurance in relation to most of the suggested improvements to the Commons amendment which I am suggesting. However, I am a bit worried that bringing forward the implementation date from 2018 to 2016 may still be problematic for the Minister. I know the Bill uses the words,
“no later than 1 April 2018”.
Therefore, if little progress is apparent as time goes by, Ministers could bring the regulation into force at an earlier date. Although it would seem better to fix a five-year deadline for the changes here and now, not least so that landlords know exactly where they stand, it would be good to hear from the Minister about the process for reviewing progress in the sector and considering an earlier starting date.
I am very grateful to the Minister for the considerable progress that has been made in improving this important Bill, and I look forward very much to hearing his response.
Lord Best
My Lords, I am very grateful to all noble Lords who have spoken, the noble Lords, Lord Deben, Lord Jenkin and Lord Whitty, and the noble Baroness, Lady Smith of Basildon. I have received support around the House for this amendment. I deeply regret that I am not in a position to take it any further. However, I wish to press the Minister a little on where we have got to at the end of this discussion. I am very pleased that Amendments 35A, 35B and 35D, relating to agents, are clearly answered by his comments, for which I am grateful.
In relation to trying to ensure that there is clarity on whether a property has met a minimum standard, whether it is above the F and G level in the energy performance rating, and on the date—2018 versus 2016—as I do not think that we will make further progress tonight on changes to the Bill, I wonder whether the Minister would be willing to agree that further consultation might take place with the sector before the Green Deal kicks in and well in advance of 1 April next year, because I suspect that the private sector would prefer a position in which it is clear that the minimum standard means E or above except in specified circumstances such as grade 1 or grade 2 listed buildings. I think the private rented sector would prefer to be clear that the deadline was 2016 rather than having 2018 as a longstop. As the Minister says, it would be possible to bring forward the date if an annual review showed that that was worthwhile. I think the sector might prefer certainty. The noble Lord, Lord Deben, mentioned this. The industry finds it more helpful to know where it stands.
We need to be clear on whether a property is or is not meeting a minimum standard as it may have had certain expenditure spent on it although it has not got to level E. That leaves an uncertainty for local authorities trying to enforce this. They would have to understand the finances of that property, not just know whether the certificate says E or above. That will complicate matters. I wonder whether a bit of consultation with private landlords early on would not be more helpful to the Government and to them in getting clarity on that matter and on the date. I suspect that instead of the reviews they would rather have 2016 for sure. Would the Minister be willing to consult on that before all these measures kick in next year so that we can see whether, through regulation and through using the power that the Bill gives to come forward from the longstop of 2018, that might not happen rather earlier with everyone’s agreement? I hope that the noble Lord might wish to say something on this proposal before I sit down.
Lord Marland
I thank the noble Lord. Of course, we are in consultation with the sector and we will continue to be in consultation with it. If the sector wishes to move in that direction, of course, we will embrace it. I give a commitment that we shall continue with the consultation and we will continue to listen.