26 Feb 2025
CIH response to MHCLG and DESNZ consultation on Reforms to the Energy Performance of Buildings regime
Introduction and main points
The Chartered Institute of Housing (CIH) is the professional body for people who work or have an interest in housing, with approximately 17,000 members across the UK. A significant proportion of our members work in retrofit, sustainability, and energy-related roles in housing associations and local authorities, and we draw on their experience and expertise to inform our policy work. In addition, we are a registered charity with a duty to act in the public interest.
It is clear that the current Energy Performance of Buildings regime requires modification. Evidence gathered by Switchee has shown that there is very little correlation between the Heat Loss Rate (HLR) of a property and its Energy Performance Certificate (EPC) rating, and researchers at Leeds Beckett University have noted that 27 per cent of EPCs in the open register display at least one flag to suggest they are erroneous. EPCs were also formulated in a time before our statutory net zero targets, and advances in technology and energy modelling methodologies mean that this is now an appropriate juncture to consider their reform.
We therefore welcome the opportunity to respond to this important consultation, and broadly support the direction of reform. To inform our response, we have consulted with our members, as well as with partner organisations across the housing, energy, and built environment sectors. We have only answered the questions where we can provide an informed and evidence-based response related to our remit as the housing professional body. Our key points are as follows:
- We agree with the adoption of the four primary metrics and three secondary metrics. These metrics provide an appropriate suite of indicators to develop future policy. The energy cost metric will also continue to be an important metric for helping homeowners, tenants, and the wider public understand the possible energy costs of domestic buildings, while the additional metrics will provide a better measurement of the energy performance of buildings and their contribution to our statutory net zero targets.
- The main challenge with the updated metrics will be their presentation. Regardless of their drawbacks, the current EPC design is based around a simple proposition of a) informing people of the likely energy costs of a domestic home, and b) making recommendations for energy efficiency improvements. With multiple metrics, corresponding to multiple possible improvements, having a clear layout and format will be critical to prevent reformed EPCs from being confusing and disempowering for households and landlords.
- It is difficult to comment on key transition issues without understanding how reformed EPCs will be used in wider government policy. The proposed design of Minimum Energy Efficiency Standards (MEES) in the private rented sector will see a shift away from the current energy cost metric towards a primary fabric and secondary heating system or smart readiness metric. While energy efficiency in the private rented sector has not significantly improved in recent years, the proportion of social rented homes at EPC Band C or above has risen from approximately 24 per cent in 2010 to 73 per cent in 2023. If the approach taken to the private rented sector is mirrored in the social sector, changing the target metric and enshrining it in legislation will create transitional challenges for the social housing sector that will need to be carefully worked through with housing providers and their representative bodies. At minimum, we would support a carryover period whereby, for the purposes of MEES regulation, a home improved to current EPC Band C would be considered exempt from MEES for a defined period of time.
- We acknowledge the reasoning for reducing the validity period of EPCs, especially in the private rented sector. However, more consideration is needed of how changes to the validity period will affect the social housing sector, which uses EPCs very differently to private landlords and homeowners. As data maturity in the sector continues to improve, many social housing providers now have a good understanding of the energy performance of their homes based on a wider range of data than that used for producing EPCs. Instead of relying on EPCs, providers also increasingly use energy modelling software and approaches allied to PAS2035 to design retrofit pathways for their homes. Reducing the validity period of EPCs could create additional costs for social housing providers for little to no gain, at a time of significant financial pressure in the sector. We would therefore recommend the following possible alternatives:
- Keeping the validity period at 10 years, with a requirement to update EPCs following a ‘material change’ to the energy improvement of the home.
- Creating an exception for the social housing sector, which would see homes defined in law as social housing keep the 10 year validity period.
- Allowing social housing providers to ‘autogenerate’ EPCs from their energy performance data. For this to be robust, the processes providers use to do this could be verified through a ‘gateway’ assessment, and audited regularly to ensure EPCs are being created accurately.
- We support reforms to improve the accuracy and reliability of EPCs. We are aware of evidence suggesting that the training of EPC assessors needs to be more rigorous, and would support action to improve the quality of training and its oversight by accreditation bodies. As domestic energy assessors (DEAs) will require training on new metrics regardless, this is an appropriate time to strengthen training and oversight more broadly.
- We would also encourage the development of metrics that could give homeowners, tenants, and landlords visibility over the climate resilience and water efficiency of their homes. Precedents for these measurements exist in the Building Regulations (e.g. Part O), and could be developed from there.
Responses to individual questions follow.
Domestic buildings – strongly agree.
Domestic buildings – strongly agree.
Domestic buildings - HLP/HTC.
While we do not have a firm, final view on this, feedback from our members suggests housing providers more commonly use HLP/HTC approaches to understand the fabric performance of their homes. However, our support for HLP/HTC is dependent on how the metric will be used in the setting of Minimum Energy Efficiency Standards (MEES) in both rented sectors, and what the accepted HLP/HTC standard/bandings will be set at.
Given the risk of condensation and overheating, which can occur in homes that receive fabric efficiency measures without adequate mitigations, appropriate consideration will need to be given to ventilation and measures to reduce solar gain during the development of the methodology.
Domestic buildings – agree.
We broadly agree with the design principles and scope set out in the consultation technical annex.
The heating system metric will encourage homeowners and landlords to transition to low-carbon forms of heating, but it must be designed carefully. While the environmental impact of a heating system will undoubtedly be an incentive for some to upgrade their homes, cost saving is likely to remain a primary motivator for undertaking retrofit. Reducing the cost of low-carbon heat, mainly electricity, is therefore likely to be a more effective way to incentivise the adoption of low-carbon heating than this metric. Further, reduced electricity costs will also feed into EPC calculations and result in a better rating on other metrics, especially the energy cost metric, which will remain the most important metric for most building occupants. We support action to reduce the cost of electricity for this purpose, which we feel must be undertaken through a combination of expanded renewable energy generation, concluding the Review of Energy Market Arrangements (REMA), fairly rebalancing gas and electricity levies, and applying a form of social tariff in the energy market to ensure low-income households can afford low-carbon electricity for heating.
Consideration will also need to be given to homes that require very little or no conventional heating at all, due to their fabric performance (e.g. homes built to PassivHaus standards), and how the heating system metric will apply to them.
Domestic buildings – agree.
We want to emphasise that the energy savings that can occur through demand side response (DSR) and energy flexibility are dependent on the characteristics, preferences, and social practices of the occupier, not just how ‘smart ready’ the home is.
The Centre for Sustainable Energy’s (CSE) evaluation of the Demand Flexibility Service (DFS) highlighted that people living with health conditions, those with financial stress, and smaller- or larger-than-average households had less positive experiences of engaging with energy flexibility. Their evaluation found these households were less able to participate in flexibility and receive the financial benefits of doing so. Research from the Research Institute for Disabled Consumers has also shown that smart heating controls are often not designed in a way that maximises their use by disabled and older people, and some of our members working for specialist older people’s housing providers have previously highlighted to us that they have struggled to find smart products that are suitable for their residents.
The smart readiness metric will need to be designed in an inclusive way, one that recognises that the accessibility and appropriateness of smart appliances and products is vital for enabling some households to benefit from them. The Research Institute for Disabled Consumers emphasises hands-free controls, visual features, audio outputs, tactile and dexterity features, as well as overall simplicity, as key principles for inclusive smart design. The ‘smart readiness’ metric needs to consider this. It would not be a good outcome for a household if their EPC defines their home as ‘smart ready’, but they are unable to benefit from flexibility because the products installed in the home to make it ‘smart ready’ do not meet their specific needs or requirements.
More generally, we agree with the detailed evidence on this point provided by the Chartered Institute of Building (CIOB) in their response to the consultation.
Domestic buildings - agree.
Domestic buildings – strongly agree.
Domestic buildings – strongly agree.
Many social housing providers are already experimenting with approaches linked to SMETERS. For example, Switchee’s Smart Meter Insights (SMI) programme allows housing providers to obtain a better understanding of the energy performance of their homes, supporting them to have the appropriate data and knowledge to commission energy efficiency improvements.
We therefore support the development of this approach, especially as it could provide a pathway to more accurate estimates of energy costs for the occupier. Implemented correctly, we can envisage a future scenario where energy costs estimates based on SMETERS approaches surpasses the energy cost metric in its accuracy and reliability.
We welcome the emphasis the consultation places on having a carefully planned transition. It is crucial that the EPC reforms do not delay actions to improve the energy performance of buildings and that homeowners or landlords who have already acted to improve the energy performance of their buildings are not penalised unfairly.
However, it is currently very difficult to make a full assessment of transition issues without more clarity on the Home Energy Model, the underpinning methodologies that will produce the new EPC metrics, and how any new metrics will be used in other government policies. We think this needs to be explored in more detail with the social housing sector. At this stage, there are four transition issues we would like to highlight that will need to be carefully considered.
Equivalence between current and future energy costs metrics
We note the statement in the consultation that equivalence between current and future metrics cannot be guaranteed, due to the replacement of SAP by the Home Energy Model (HEM). For several years, social housing providers have been working towards improving their homes to EPC Band C (measured on the EER), resulting in the proportion of social rented homes in the sector at EPC Band C or above rising from approximately 24 per cent in 2010 to 73 per cent in 2023. We are aware of one housing provider that has undertaken preliminary modelling with the HEM, the outcome of which was around six per cent of their total homes currently at EPC Band C falling below that rating. Even a small percentage shift of this kind – when extrapolated to the social housing sector as a whole – could cause large impacts on the business planning and retrofit strategies of individual providers.
We acknowledge that if government decides to set MEES in the social housing sector in the same way that is preferred in the private rented sector MEES consultation, the energy cost metric will not be used for the minimum standard. Regardless, future energy efficiency policies, schemes, and programmes (such as the refreshed Fuel Poverty Strategy or the Warm Homes: Social Housing Fund) could use the reformed energy cost metric, and this may result in some homes that currently meet EPC Band C needing to be retrofitted again to meet the new energy cost standard. This would be disruptive for residents and costly for the housing provider. At minimum, we would therefore support a period of equivalence whereby, for a set period of time, the previous energy cost metric on an old EPC is considered equivalent with the new metric when the new metric is used in any related government policy.
Minimum energy efficiency standards
The government’s consultation on MEES in the private rented sector proposes a preferred option based on a primary metric of fabric performance ‘plus’ meeting a secondary metric of heating system or smart readiness. If the approach taken to the private rented sector is mirrored in the social sector, changing the target metric and enshrining it in legislation will create transitional challenges for the social housing sector that will need to be carefully worked through with housing providers and their representative bodies. At minimum, we would support a carryover period whereby, for the purposes of MEES regulation, a home improved to current EPC Band C would be considered exempt from MEES for a defined period of time.
The impact of multiple transitions on social housing
The transitional arrangements and considerations published in the present consultation must be seen in the context of a wider set of policy and regulatory changes occurring in the social housing sector. At present, housing providers are familiarising themselves with, or preparing for the introduction of, a range of policy and regulatory changes. These include the review of the Decent Homes Standard (incorporating MEES), Awaab’s Law, heat network regulation and the parallel Heat Network Technical Assurance Scheme (HNTAS), and other secondary legislation associated with the Building Safety Act, Social Housing (Regulation) Act, Energy Act, and Supported Housing (Regulatory Oversight) Act. These changes all have different timelines, transitional periods, and attached costs, at a time of ‘reduced financial capacity’ in the sector, according to the Regulator of Social Housing. To the greatest extent possible, the ‘bundled’ impact of these transitional arrangements need to be considered together.
The Future Homes Standard
Lastly, it would be appropriate for EPC reforms to be confirmed alongside the introduction of the Future Homes Standard.
Mixed and tenure-specific – see below.
Disagree.
We acknowledge and agree with the reasoning set out in the consultation document regarding the private rented sector. However, more consideration is needed of how changes to the validity period will affect the social housing sector, which uses EPCs very differently to private landlords and homeowners.
An EPC typically provides the same information whether it is valid or expired. Renewing an expired EPC, or commissioning a new EPC, is only of value if a material change has been made to the home that could impact the EPC rating. The problem, as we understand it, is that energy efficiency improvements are made to homes without a new EPC being carried out, which means the old EPC becomes outdated. The accuracy and validity of EPCs is therefore not strictly related to their age, but to whether they are renewed when significant energy efficiency changes are made to a home.
In the social housing sector, most providers now use energy modelling tools and methodologies, typically linked to RdSAP, to generate energy performance data. In many cases, this data exceeds that which is required for an EPC, and is more accurate. This is because they are based on stock condition survey data and other information available to the housing provider (e.g. cavity wall insulation certificates). DEAs do not have access to this information, and, as they do not usually undertake an invasive survey, they typically cannot accurately reflect the true fabric performance of the home when producing their EPC.
Regarding the value of updating EPCs more frequently to more accurately inform building owners on recommendations, this will not be as valuable in the social housing sector as it is in the private rented and owner occupied sectors. This is because many social housing providers now use the principles and methodologies associated with PAS2035 and energy modelling software to make decisions about how they will improve the energy efficiency and performance of their homes, not the recommendations on EPCs. In part, this has been due to concerns about the reliability and accuracy of EPCs, noted in the consultation document, and a growing focus on whole-house retrofit, for which PAS2035 is essential.
In the social housing sector, reducing the validity period could therefore have the effect of increasing costs for little to no gain, either for housing providers or their tenants. Members and partners have shared the impact this might have with us:
- One of our members works at a housing association that spends approximately £100,000 per annum on undertaking EPCs. If the validity period is halved, they estimate that this would at least double, depending on the increased cost of undertaking the assessment.
- One housing provider with around 12,600 homes estimates a cost of £500,000 per annum, compared to the current figure of £70,000 per annum, if EPC costs increase to £200 per certificate and are required every five years. This is an increased of around £430,000 per annum.
- Overall, the G15 group of London social housing providers estimates a cost of approximately £25 million per annum if EPCs are undertaken over a five year period.
Crucially, our members and partners have highlighted these additional costs would significantly reduce the amount of money that could be spent on actual energy efficiency improvements.
For these reasons, we therefore disagree with the intention to reduce validity periods in a tenure-blind way. In the social housing sector, this risks little to no benefit for considerable cost. We would recommend the following as possible alternatives:
- Keeping the validity period at 10 years, with a requirement to update EPCs following a ‘material change’ to the energy improvement of the home.
- Creating an exception for the social housing sector, which would see homes defined in law as social housing keep the 10 year validity period. The validity period for other types of home could be lowered.
- Allowing social housing providers to ‘autogenerate’ EPCs from their energy performance data. For this to be robust, the processes providers use to do this could be verified through a ‘gateway’ assessment, and audited regularly to ensure EPCs are being created accurately. We have engaged with an energy modelling specialist consultancy that estimates this approach would be possible.
We are aware of instances where housing providers are not able to access historic EPC data because they cannot identify the original DEA. Enabling housing providers (and the energy modelling companies they work with) to be able to pull their data from a central database would therefore be valuable. Housing providers should also be able to access the underlying data from DEA assessments immediately, which could then be plugged into asset management databases and energy modelling software.
Generally, we support reforms to make EPC data more interoperable and accessible. Current EPC data, provided through Open Data Communities, is challenging to access and use for non-specialists.
We are aware of evidence suggesting that the training of EPC assessors needs to be more rigorous, and would support action to improve the quality of training and its oversight by accreditation bodies. As domestic energy assessors (DEAs) will require training on new metrics regardless, this is an appropriate time to strengthen training and oversight more broadly.
More generally, we agree with the detailed evidence on this point provided by the Chartered Institute of Building (CIOB) in their response to the consultation.
While we acknowledge this could increase the costs of training and therefore the costs of obtaining an EPC, we think a review should be undertaken to assess if Level 3 is an appropriate level of qualification for a Domestic Energy Assessor. The review could examine if increasing the level of qualification to a Level 4 would result in an improved accuracy and quality of energy assessments.
As in our response to question seven, consideration needs to be given to how the ‘smart readiness’ metric will be designed in a way that is inclusive to the needs of disabled and older people.
We have provided some evidence on the costs of reducing validity periods in the social housing sector in our response to question 14.
The present reforms need to be considered in the context of the likely costs and implementation timelines of other pieces of government policy, especially the review of the Decent Homes Standard (incorporating MEES), Awaab’s Law, heat network regulation and the parallel Heat Network Technical Assurance Scheme (HNTAS), and the costs of subscribing to and complying with the Regulator of Social Housing’s regulatory regime and the Housing Ombudsman Service.
These costs are occurring in the context of broader financial challenges facing the social housing sector, which has been evidenced in previous and current select committee inquires. We agree with and support the National Federation of ALMOs’ (NFA) response to the consultation, which notes that local authorities’ Housing Revenue Accounts are under significant strain due to rent cuts and caps over the last few years, higher than expected inflation, and unplanned new regulatory requirements.
Even if the recommendations we make in question 14 are taken forward, we recommend that more engagement is undertaken with social housing providers to ensure that the costs of the policy, especially the reduced validity period, are accurately reflected in an updated impact assessment disaggregated by housing tenure. The impact assessment must consider the relative costs and benefits of changing the validity period, and whether any benefits to the social housing sector are proportionate to the increased costs of commissioning EPCs more frequently and the reduced benefits that will occur through less money being available for energy efficiency improvements.
For more information on the consultation visit the government's website.
For more information on our response please contact Matthew Scott, senior policy officer, matthew.scott@cih.org
