Usually as a researcher I base my insights on the research and systematic empirical studies I carry out. However, on this particular occasion, the insights are of a more personal nature. Having started to do research on building energy efficiency policies about a year ago, I was interested to be faced with one specific policy instrument in the course of relocating from Finland to the UK – the Energy Performance Certificate.
The Energy Performance Certificate (EPC) provides an assessment of the level of insulation of the property, its heating system, hot water and lighting, giving an overall energy efficiency rating and an environmental impact (CO2) rating. In other words, it provides a common standard against which all buildings can be compared and measured. All European countries are mandated to have a scheme in place for EPCs of both new and existing buildings, following the European Performance of Buildings Directive. Ideally, the EPC improves the quality of properties both for sale and let and encourages new investment on building energy efficiency through increased disclosure of information:
Of course, the EPC exists together with a range of other policy measures addressing building energy efficiency. This means that improvements in building energy efficiency, if they occur, are a result of the combined influence of a mix of policies as well as other drivers.
Needing a family home for the next two years in Brighton – the lovely seaside city with a friendly atmosphere, quaint little shops and surrounded by the beautiful South Downs – I started exploring the rental market in May. Having been a home owner in Finland for over ten years, I had mostly forgotten how the rental market works. The most useful tools in the process of finding a home are of course the various internet services. They not only enable you to check what is on the market, but also increasingly include lots of useful information, such as what school catchment areas a particular property is likely to fall into and the energy performance of the property. A number – while not all – of the real estate agencies provide the energy performance certificates online.
However, choosing a house or an apartment to rent (or buy) is a complex process, where one is trying to accommodate a number of factors: the size and ambiance of the property itself, the price of course, distance to work or other key locations from the perspective of everyday life, the closeness of services, the kind of schools and nurseries that exist in the area as well as the general appearance of the street and the area itself. Thus, the EPC is just one factor among a large number of other ones influencing selection – even for someone who is actively concerned about the energy efficiency of homes.
What soon became clear to me that Brighton is the sellers’ market. Demand for rented property is very high. (I have also heard that the same applies when buying a property). Thus, even for me, the EPC eventually became a “nice to know” factor rather than being a decisive part of the process – unfortunately. I have come to the conclusion that we would need a buyers’ market in order for the EPC to be effective, particularly in the rental market. However, the EPC is likely to be more influential for home owners as they will be reaping the benefits of improved energy performance not only through reduced energy bills but through other benefits, because better insulation and better windows also reduce outside noise.
So, what to take out of my personal experience? For home buyers, we should keep informing about the benefits of improved energy performance and how they can profit, i.e. flagging up the EPC. For those renting their homes, I guess we just wait for the market to change… Unless, we can come up with policy packages that better connect EPCs with benefits to the landlords. What is clear, however, is that in the looming absence of a Zero Carbon Homes target, the EPC is not going to fill the void.
Dr. Kivimaa is Senior Research Fellow at SPRU working for the Centre on Innovation and Energy Demand (CIED). Her previous research ranges from climate, energy and environmental policy analysis from the perspective of innovation to examining change and stability in energy and transport systems. Her current research interests include policy analysis from low-carbon innovation and transition perspectives as well as policy complementing approaches to support low-carbon innovation, such as intermediation. She has a BSc in Environmental Science & Business Management (University of Westminster, 1997-2000), an MSc in Environmental Technology (Imperial College, 2001-2002) and a PhD in Organisations and Management (Helsinki School of Economics, 2004-2008). Prior to joining SPRU she has worked for 12 years as a researcher in the Finnish Environment Institute (SYKE). She has since 2012 been Docent in the Department of Management and International Business at the Aalto University School of Business, Helsinki.
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Welcome to England, land of advanced neoliberalism, zero local autonomy and devoid of real democracy. Thus here, the Government leave it to the market to resolve our nations appalling housing stock, and when market interventions are attempted, such as the Green Deal, they are so half-hearted and vulnerable to parasitic capitalism (requiring 7.5% interest compared with zero or low interest in German programmes), and lack of business confidence (Government cannot be trusted to hold the course – witness the zero-carbon homes debacle). Thus the system of innovation struggles to gain critical mass.
We do not need to wait for the market to make changes. Landlords, already heavily subsidised through tax perks and housing benefit should not benefit from any intervention – their ROI are good enough. Rent caps commensurate with mandatory energy efficiency standards are possibly required. With current housing pressures, and the pressures on domestic life with increasing precarity, folk are not going to be in a position to make rational decisions viz energy efficieny any time soon.
Warm Regards, and enjoy your stay 🙂
This was intended to partially fill the void:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/346767/Domestic_PRS_Regulations_Consultation_Draft__v1_6__No_tracks_final_version.pdf
Thank you for your comments. I agree that we need a policy mix that also includes regulation to improve the housing stock also for those renting their properties. While regulating to improve the energy efficiency of the existing building stock can be problematic and needs to be designed carefully, many examples from the new build side show that what has in effect driven the energy efficiency in housing is stricter requirements in the building code, i.e. regulation (a good example of this is are improvements in the Finnish building stock). While voluntary measures, such as BREEAM, have been more successful in the side of commercial buildings, even some experts agree that they are not likely to work well for the housing sector.
Given this near market failure that you highlight, it becomes more important that the level of performance expected of the house is raised. The current government has repeatedly put off the date that a minimum performance (now April 2016 as I recall). However, the proposed level is extremely low, meaning only totally negligent landlords would have to do anything to their property.
Off course, there are plenty of negligent landlords to work on. For example the enhanced regulation of Houses in Multple Occupnancy (HMOs) was reduced the counci for 4 wards in Brighton (recently expanded further). These regulations obliged close to 1/3 of landlords to insulate the loft for the first time!
So there are a range of regulatory levers that also need to work on conjunction with the EPCs. Sadly (given carbon reduction targets, and the ongoing concerns over climate change) these are not promoted by Central government, but as seen in Brighton & Hove Local government can help. So too can,environmental community groups like Hanover Action for Sustsianable Living, with its 1010 Group, that seeks to highlight, but also enable community action to overcome this market failure; after all, tenants quality of life and potential fuel poverty, are also drivers for action.