Calling on Government

There are 3 key areas we addressed:

• Reform of the EPC system - while we welcome EPC reform, we recommend that implementation is supported through having more time between completion of EPC reform and new MEES (Minimum Energy Efficiency Standards) regulations coming into force.
• Timings and approach around implementation - we acknowledge the timing restraints given between EPC reform and MEES implementation and so recommend a phased approach, allowing capacity in the retrofit sector to build over time.
• The level of the cost cap and its national structure - we remain opposed to a single national cost cap and propose developing a more flexible approach that reflects the diversity of housing stock.

Read the full letter below:

"Dear Secretary of State

I wanted to reinforce Nationwide’s continued commitment to delivering energy efficient homes and make some suggestions about the implementation of private rented sector Minimum Energy Efficiency Standards to support the Government’s policy aims. I would welcome the opportunity to meet to discuss how we could work together to deliver this policy effectively.

Nationwide is the UK’s largest buy to let lender through our The Mortgage Works brand, with over 400,000 landlord accounts. We are committed to supporting the owners of properties on our mortgage book to make them energy efficient, ensuring tenants have lower energy bills and good quality homes.

The MEES proposals will be delivered on top of significant change within the private rented sector including the Renters’ Rights Bill, income tax changes and market impact of interest rate rises.

These pressures on landlords have caused many of them to sell properties and leave the market making it more difficult for renters to find a home and causing rents to increase. Average monthly rents in the UK are now £1332 per month and have risen by 28% (£294) over the last four years.

While the MEES reforms have been on the agenda for some time, landlords will now be examining the details and making decisions around sales and purchases. As with Government, we want them to stay in the market to support the ease of access and affordable housing the sector offers while at the same time making their properties greener.

Nationwide has three key areas we would like addressed to support effective delivery of the policy:

Interaction with reform of the EPC system. EPC reform is welcome and should ensure the EPC provides owners and lenders with the information needed to support energy efficiency improvements. Although this change is welcome it will place a different set of requirements on landlords around the improvements they will need to make to meet EPC C. Certainty is important for future planning in any business and these two consultations happening at the same time means landlords do not have a clear objective. To support effective implementation, we would like more time between completion of EPC reform and new MEES regulations coming into force.

Timings and approach around implementation. With EPC reforms not due to be in place until 2026 the timeline for MEES implementation is challenging. The requirement to meet EPC C standard by 2028 for new tenancies and 2030 for all tenancies will not give enough time for landlords to understand the new requirements and take action to meet them, particularly when factors such as availability of skilled workers are taken into account. Nationwide would prefer a phased implementation which tackles the least energy efficient properties first and allows capacity in the retrofit sector to build over time. The initial requirement should be for EPC E properties to be upgraded to EPC C by 2030. Requirements could then shift to EPC D properties with the aim of all rental homes meeting the EPC C target by 2033.

The level of the cost cap and its national structure. Nationwide remains opposed to a single national cost cap setting the maximum amount landlords are required to spend on improvements and believes that a cap of £15,000 is set at too high a level. The current approach fails to consider the highly regionalised nature of the UK property market in terms of house prices and rents. A cap of £15,000 might be affordable to a landlord in the context of a large property in the South of England but would represent a significant proportion of property value in the North East. The cost cap should be reconsidered and Nationwide would be happy to work with Government to develop an approach which recognises the complexity of the diverse nature of the UK housing stock and owners’ circumstances.

Nationwide believes the three areas above would allow landlords to support the net zero transition while maintaining the balance with providing rental properties to help deliver economic growth and affordable housing. Support for good landlords is vital to a well functioning economy and supportive of the Government’s goals for the long term growth we all want to see for the UK. Measures that are challenging to implement may cause landlords to sell properties into the owner occupier sector, where the same standards are not present, or move them into the grey market where regulations are ignored. This would reduce the impact of the proposals compared to the potential position if they are introduced effectively.

I would welcome the opportunity to meet to discuss how the minimum EPC C requirement can be effectively delivered, and the support landlords may need to help achieve this.

Yours sincerely

Damian Thompson
Landlord Commercial Director, Nationwide"

By engaging directly with government and championing the needs of landlords, we're working to ensure future energy efficiency requirements are both achievable and balanced.