Government internal spat over landlord EPC cost cap revealed

Ed Miliband’s plans to deliver greener homes have been thrown into disarray as HM Treasury and Department for Energy Security and Net Zero have aruged over multiple policy issues including how much landlords should be forced to pay for upgrades to rental properties, it has been revealed.

As part of those plans, the energy secretary had intended to launch his £13 billion warm homes plan in October after winning funding during the spending review. However, Martin McCluskey, the Minister for Energy Consumers, told parliament this week the plan would now be “rolling out before the end of the year”.

But several sources told The Times the Treasury and energy department were at loggerheads on policy options, although a Government source strongly denies this. The cost of upgrading to the looming minimum EPC band C, which is now just three years away, has been cited as a key reason why many landlords have, or are considering selling up.

Landlord spending cap

This includes an argument over the spending cap for landlords under separate rules that will force the private rented sector to achieve EPC C ratings by 2028 for new tenancies and 2030 for all tenancies. The cap was originally set at £15,000 per property.

The cap is the maximum landlords must spend on energy efficiency improvements before they can apply for an exemption if their property still fails to meet the EPC C standard. The figure has already been increased from a previous proposal of £10,000 and from the current cap of £3,500.

Government estimates suggest the average cost of upgrading properties to EPC C is around £7,700, but around 10% of properties cost more than £15,000 to upgrade. A consultation that closed in May asked for feedback on whether the £15,000 cap is appropriate, with some proposals suggesting a lower £10,000 “affordability exemption” for certain properties.

Billions of pounds of investment and spending are on hold while we await the plan.”

Ned Hammond, Deputy Director of Policy at industry body Energy UK, said: “Billions of pounds of investment and spending are on hold while we await the plan.”

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Author: Gemma