Conversation

Housing efficiency subsidies rarely work well for the people who needed them most: tenants in cheap housing. For many years, I rented somewhere with single-glazed windows and no loft insulation. The cost of fixing it would have been at least £20k (probably a lot more, given the state of the roof), which was many years of the £350/month rent I was paying. It cost a lot to heat in the winter, I was basically running the boiler all of the time. There were some insulation subsidies available for the property owner, but they weren’t the ones paying the heating bill so didn’t see the saving and, because the subsidies didn’t cover 100% of the costs, they would have spent money to save me money. The incentives were not aligned.

So I have a simple proposal: mandate minimum efficiency requirements for rented accommodation with a 3+ year compliance requirement, require letting agents and private rental listings to include the average heating cost for the year in the advert, and provide government-backed loans to cover 100% of the cost of compliance. If you don’t have the liquid funds available to pay for upgrades (or don’t want to spend them), you can get a Bank of England base rate loan that covers the cost of the upgrade. The loan accrues interest at the base rate, but you don’t have to pay any of it back until you sell the property, at which point the capital plus interest must all be repaid (you can also pay it back in advance). The same technique could be applied to heat pumps, solar panels, and so on.

I would expect that this would stimulate the economy (jobs for builders), reduce emissions (less waste from inefficient heating), and have a high take up because the incentives are now aligned. Having a well-heated house reduces the risk of damp and similar things that can dramatically lower property values and the improvements are likely to increase property values with no up-front costs, making them attractive to landlords.

Anyone know why this wouldn’t work?

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