Schedule 1 - Reducing carbon emissions and home-heating costs: minor and consequential amendments

Energy Bill [Lords] – in a Public Bill Committee at 2:30 pm on 16th June 2011.

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Amendments made: 25, in schedule 1, page 84, line 7, leave out paragraph 2.

Amendment 26, in schedule 1, page 84, line 19, leave out paragraph 6.—(Gregory Barker.)

Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

I beg to move amendment 132, in schedule 1, page 85, line 39, at end add—

‘Energy Performance of Buildings (Certificates and Inspections) Regulations 2007

13 The Energy Performance of Buildings (Certificates and Inspections) Regulations 2007 are amended in accordance with paragraphs 14 to 22.

14 In paragraph (2) of Regulation 5 for “make available” substitute “provide”.

15 Regulation 5A is repealed and replaced with a new Regulation 5A as follows—

“Providing energy information on marketing

5A (1) Subject to Regulation 7, this regulation applies where—

(a) a property is to be sold or rented,

(b) marketing materials are prepared for the purposes of marketing the property to persons who may be interested in buying or renting the property,

(c) those marketing materials are made available publicly or to any person who may be interested in buying or renting the property by the relevant person or by another person on his behalf.

(2) The marketing material must include the asset rating of the building expressed in the way required by Regulation 11(1)(a).

(3) In this regulation “marketing materials” means any written or photographic materials whether electronic or physical, used for the marketing of a property for sale or rent.”.

16 Regulation 6 is amended as follows—

(a) in paragraph (1)(a) remove the word “residential”,

(b) in paragraph (1)(a) after “to be sold”, insert “or rented”,

(c) in paragraph (1)(b) after “in buying”, insert “or renting”,

(d) in paragraph (2) for “once a valid energy performance certificate has been obtained for the buildings the person” substitute “The person”.

17 Regulation 11 is amended as follows—

(a) in paragraph (1)(d) after sub-paragraph (vii), insert—

(i) whether the property is subject to a green deal plan under part 1 of the Energy Bill 2011”,

(b) in paragraph (3)(a) for “10 years” substitute “one year”.

18 In paragraph (2) of Regulation 38 remove the words “5A(3), 5A(4)”.

19 In paragraph (1) of Regulation 40 remove the words “5A(3), 5A(4)”.

20 Regulation 42 is amended as follows—

(a) in paragraph (1)(a) remove the words “he is not a person to whom the duty under Section 5A(2) applies”,

(b) in paragraph (1)(b) for “make available” substitute “provide”,

(c) remove paragraph (1A) of Regulation 42.

21 In paragraph (1)(a) of Regulation 43 remove the words “5A(3), 5A(4)”.

22 In paragraph (1)(a) of Regulation 50 for “make available” substitute “provide”’.

Photo of David Crausby David Crausby Labour, Bolton North East

With this it will be convenient to discuss the following:

New clause 31—Energy performance certificates on sale and rent—

‘(1) A valid energy performance certificate prepared in accordance with the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 (S.I. 2007/991) (for the purposes of this section “the Regulations”) must be provided free of charge to every prospective buyer or tenant at the earliest opportunity in accordance with Regulation 4 of the Regulations as amended by this Act.

(2) All materials used for the marketing of a property for either rent or sale shall include the asset rating of the building expressed in the way required by Regulation 11(a) of the Regulations.

(3) All written particulars about a building prepared for the purpose of providing information about the building to persons who may be interested in buying or renting the building must include a copy of a valid energy performance certificate for the building prepared in accordance with the Regulations.

(4) An energy performance certificate is only valid if it was issued no more than one year before the date on which it is made available.’.

Provides for energy ratings to be part of marketing materials for both rental and sale properties; for EPCs to be provided rather than simply made available; and for EPCs to have a life of one year.

New clause 38—Disclosure of energy performance certificates in connection with sale or letting out—

‘(1) This section applies where—

(a) a property, or a lease of a property, is to be sold; or

(b) a property is to be let out—

(i) under a tenancy or licence agreement; and

(ii) on the basis that the prospective tenant or licensee is to be liable for paying the energy bills for the property.

(2) The seller or prospective landlord or licensor must—

(a) obtain a valid energy performance certificate in accordance with energy performance regulations made under the Building Act 1984 or any succeeding energy performance legislation; and

(b) provide this certificate free of charge to any prospective buyer, tenant or licensee at the specified time.

(3) An obligation under subsection (2) may be discharged by an agent.

(4) For the purposes of subsection (2), a person becomes a prospective buyer, tenant or licensee in relation to a property when the person—

(a) requests any information about the property from the seller, prospective landlord or licensor or an agent for the purpose of deciding whether to buy or let the property;

(b) makes a request to view the property for the purpose mentioned in paragraph (a); or

(c) makes an offer, whether oral or written, to buy or let the property.

(5) For the purposes of subsection (2), an energy performance certificate is only valid if—

(a) the certificate relates to a period that is no more than one year from the time that the certificate was issued; and

(b) the person required to provide the certificate has no reasonable grounds to suspect that the energy performance information on the certificate is no longer accurate.

(6) For the purposes of this section—

(a) an agent is a person acting on behalf of a seller or prospective landlord or licensor in the sale or letting out of a property;

(b) specified, in relation to time, means specified in regulations made by the Secretary of State.’.

Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

Amendment 132 and new clause 31 seek to address the role of energy performance certificates in the house-buying process. I am sure hon. Members will agree that it is vital to encourage awareness of energy efficiency, particularly when people are moving house, which is often the best opportunity that many of us have to make improvements, whether we are renting or buying.

Greater use of EPCs would allow buyers or tenants to make a more informed choice about the energy efficiency of the home they are considering moving into. EPCs are the primary means of doing that, and their effective delivery is crucial if households are to be made aware of the energy efficiency of their homes and the measures that they could use to improve them, which might be financed by the green deal or through the energy company obligation or directly by home owners or social or private landlords.

I do not believe that a simple transposition of the recently recast EU energy performance of buildings directive into UK law is sufficient. Such a move would, for example, only require a new EPC if the existing one was more than 10 years old when the house was put up for sale or rent. Instead, I believe legislation should be enacted now, so that EPCs can be implemented in a way that maximises their impact and effectiveness, increases awareness of energy efficiency with prospective tenants and home buyers, kick-starts the green deal and gives industry the confidence to invest in energy assessment measures.

Subsection (1) of new clause 31 seeks to ensure that the EPC is provided to prospective tenants and buyers rather than, as is currently the case, made available on request. That, in effect, means that many people never see an EPC. If enacted, the proposed new clause would mean that when a prospective tenant or buyer inquires for the details the EPC must be provided as part of the property’s particulars. The measure simply brings forward the requirement in the EU energy performance of buildings directive, which must be implemented by member states by July 2013. I am simply suggesting that we bring that forward a little.

Subsection (2) of new clause 31 would ensure that all materials produced to market a property, such as a website listing, window display and brochure, will include the asset rating of the property from the EPC—in other words, the A to G ratings. Such a change would mean that the energy efficiency of a property would be communicated to prospective buyers and tenants at the earliest possible opportunity. As things stand, the marketing materials do not have to detail the energy efficiency of a property at that early stage. I firmly believe that providing prospective tenants and buyers with information on energy when they are first considering renting or buying would make the efficiency of buildings a much greater part of their overall consideration.

The measure was, in fact, recommended by the Department for Communities and Local Government consultation on EPCs, which was launched in March 2010. The consultation argued that requiring EPC rating on adverts would ensure that prospective tenants and purchasers of domestic and non-domestic properties are provided with details of the EPC rating at the earliest possible stage. It would enable prospective tenants and purchasers to focus their search on properties above a certain band or rating, if they wished. It would allow landlords and vendors of properties with high levels of energy efficiency to highlight that feature in their advertisement. It would improve awareness of energy efficiency and the contributions that buildings can make to a decrease in carbon emissions, and it would improve compliance with the current requirements.

The summary of responses to that consultation records that the proposal was supported by 94% of the 140 respondents, which is pretty strong support. Despite that overwhelming support for the measure, the proposal was abandoned by the DCLG under the coalition Government, as it was deemed to be gold-plating that would not be pursued. I argue strongly that the proposed new clause is not about gold-plating. It is merely about bringing forward EU regulations so that they dovetail more neatly with the implementation of the green deal. I hope the Minister will concede that point.

Subsection (3) of new clause 31 would ensure that all written particulars for marketing a property for sale or rent would include a valid EPC. At the moment estate agents can provide details of a property that do not give any information on the energy efficiency of a building if the EPC has been commissioned but not delivered, or if the property is for rent. As I said earlier, including an EPC in a property’s written particulars means that the energy efficiency will become a key determinant in a decision on which home to rent or buy.

Finally, subsection (4) of new clause 31 would ensure that EPCs remain up to date by setting a realistic and workable validity period for the information provided in an EPC. As the EPC is to become a key tool in communicating energy efficiency in general and the green deal in particular, we should ensure that it is always relevant. An EPC with a lifespan of more than a year risks being out of date by the time it is being considered, to the detriment both of the property owner or letter and the property buyer or renter. Informed decisions cannot be made on inadequate information. The current validity period of 10 years is far too long in the new climate of energy efficiency improvements that the Government want to create. Nevertheless—this is important—the shorter validity period that the new clause envisages does not mean necessarily that the EPC must be replaced each year, which would be onerous, because a new EPC would be needed only if a property were to go on the market and if the EPC at the time was more than a year old.

I remind members of the Committee that the information contained in an EPC, particularly the all-important recommendation section, is time-sensitive, as technologies change rapidly. It should therefore be updated regularly. Even more rapidly changing are the costs of energy efficiency measures and the cost of energy itself, which clearly affect the payback period of a measure. The Government’s advice websites or telephone numbers on the EPC might also change regularly. The purpose of an EPC is to inform a tenant or purchaser about the costs of running a home and of improving it, so it is absolutely essential that such information is accurate and up to date.

A shorter validity period means that EPCs would be genuinely useful and not just a regulatory burden. There is a real risk that out-of-date or irrelevant information on EPCs might act as a barrier to households taking up the green deal, so I ask the Minister and the Committee to support new clause 31 as well as amendment 132 that would amend the current regulations.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

I wish to speak to new clause 38, which shares many of the sentiments expressed by the hon. Member for Brighton, Pavilion about amendment 132 and new clause 31. Its aim is to ensure that up-to-date EPC information is available before sale or rent of a property. At present, an EPC is not always made available in advance of the purchase or tenancy agreement of a property and, under current regulations, it is an offence to disclose information derived from an EPC about a building to someone who is not connected legitimately to the decision to purchase or rent the property. That can prevent consumers from comparing homes of similar design in similar areas on the basis of energy efficiency and further prevent energy performance companies from contacting home owners to offer them deals regarding the improvement of their homes. Under current  requirements, EPCs are legally valid for 10 years, which inherently does not ensure the accurate measure of the present state of a property.

The Government envisage that moving home will be a key trigger point for the green deal take-up, so the EPC has a crucial role to play in encouraging energy efficiency. It signals to the potential owners or tenants that their energy bills will be lower and it could be an influencing factor in the decision to buy, adding value to a property. However, as procedure currently stands, many people do not see the EPC until they are in the property. I know from experience of buying a new build in Liverpool last year that I did not see the EPC until I had moved into the property.

The new clause would inform the private rented sector tenants of matters to avoid their renting hard-to-heat properties. Communicating energy efficiency to prospective buyers and tenants is therefore an important part of kick-starting the green deal, improving awareness and encouraging energy efficiency behaviour change. If the EPC is to provide accurate information to the tenant or home buyer about the cost of heating the home and the potential for improving it, such information must be up to date and relevant. Making EPCs more visible in the marketing of properties is also important when communicating to potential buyers or renters, and could enable tenants and purchasers to focus their home search around the energy efficiency rating. That would also provide an incentive to landlords and sellers to improve their properties.

The Business Council for Sustainable Energy put forward the recommendation in its submission in response to the call for evidence seeking views on how to improve the energy performance of buildings in support of the green deal, issued by the Department of Energy and Climate Change and the Department for Communities and Local Government in December 2010, that legislation should include strong enforcement

“to ensure prospective tenants/owners have access to up-to-date EPCs.”

Julian Todd, the chief technical officer of ScraperWiki Ltd, highlights in written evidence submitted to the Committee that

“it is an offence to disclose information derived from an Energy Performance Certificate…to someone who is not legitimately connected to the decision to purchase that building.”

As I have said, that prevents comparisons from being made between the performances of houses that are of a similar design in the same area, and means that properties with high energy efficiency might not command the price differential that they deserve.

The Minister clarified in a previous sitting that, in light of the proposal, the Government propose to

“look again at the validity period of EPCs because the present period of 10 years is clearly not fit for purpose.”––[Official Report, Energy Public Bill Committee, 14 June 2011; c. 220.]

Although he contended that a one-year period might be “slightly onerous”, he intimated that the Government are minded to move closer to that rather than to keep the 10-year status quo, and that they will be looking to move to a “much more progressive regime” this autumn.  We are keen to receive information on the direction that the Government plan to take in regulating EPC lifespans and we hope that their work will be coupled with the promotion of their EPC register, which was announced in the previous sitting.

To conclude, we agree with the Minister’s view that the current lifespan of EPCs prevents accurate evaluation of a property’s under-performance. More frequent EPC evaluations would bring us closer to ensuring that certificates accurately inform consumers. However, the accuracy of evaluations and frequency of assessments are relevant only if EPCs are readily accessible to all relevant parties before sale or rent, so the proposal seeks to ensure an increased availability of EPC data. I hope that the Minister will support its aim.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons) 2:45 pm, 16th June 2011

I echo the comments made by the hon. Member for Brighton, Pavilion and those in the very good speech made by my hon. Friend the Member for Liverpool, Wavertree. My hon. Friend reiterated some excellent points that were made in previous discussions, from which I shall draw out the key matters.

We often think about newspaper advertising for properties, but online advertising will be far bigger than that. It is online advertising that I want the Minister to address, because in future its scale will dwarf that of any printed advertising, or even that of high street displays in letting agents. It is clearly the future. Current evidence suggests that online advertising for sales and rentals is way ahead of any other type.

The Minister sent me a letter, in which he states:

“In relation to Energy Performance Certificates…everybody will be able to access the data contained in EPCs that is held on the EPC Register.”

I appreciate that he is taking this good step forward. He mentions the right of access and safeguards, of course. I urge him to take on board the comments of the previous two speakers and the value of online advertising. As my hon. Friend the Member for Liverpool, Wavertree said, we have an opportunity to push green deal and consumer choice, and to allow people to choose energy-efficient properties. The Minister’s letter stated:

“Some organisations, such as Green Deal providers, local authorities, research organisations and”— the important bit—

“others with an interest in promoting energy efficiency will be allowed to access the data in bulk”.

They will not be limited in searches. Will others with an interest in promoting energy efficiency include vertical internet search engines, which make up the bulk of internet advertising? They must account for 99.9% of online advertising and that is where the market is. If, as the hon. Member for Brighton, Pavilion said, consumers are given choice, will the Minister allow access to the database at a commercial rate, so that we can push the green deal and energy efficiency?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

The amendments provide that when a property or the lease of a property is to be sold, or a property is to be let under a tenancy or licence agreement, the seller, prospective landlord or licensor, or their agent, must provide an EPC free of charge to the prospective buyer, tenant or licensee. It is worth remembering that EPCs, and specifically their 10-year lifespans, were introduced under the previous Government—in 2007, I believe. The hon. Member for Liverpool, Wavertree is absolutely  right that this will be an opportunity to improve the original EPC concept. We fully sympathise with the points raised by the hon. Member for Brighton, Pavilion and others, and I fully appreciate the good sense that underlines them.

I also want to be clear that any marketing materials must contain details of the building’s energy efficiency.

Photo of Tom Greatrex Tom Greatrex Shadow Minister (Scotland)

Before the Minister moves on to the marketing of property, he has mentioned the opportunity to improve EPCs, and I wonder whether he has had any discussions with his counterpart Ministers in Scotland on EPCs. I am sure he is aware that the methodology of EPCs in Scotland is slightly different from that in England and Wales, and there have been concerns about whether Scottish assessors are able to produce whole-house surveys that fully address the energy efficiency of a property. In the context of his comments about improving EPCs, is that something that he has discussed? If he has not, will his officials be able to take that up?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I have not personally had any discussions with Scottish Ministers on that issue, but my officials are fully engaged and have a good working relationship with the Scottish Executive. I hope to be in Edinburgh before the end of the month, speaking on a range of green issues, and I hope to have the opportunity to meet Ministers from the Scottish Administration. If the hon. Gentleman believes it to be helpful, the matter is certainly something that I will raise with them.

Obviously, the specific requirement in the amendment is that the validity of an EPC would be reduced from the current period of 10 years to one year and that the person providing the EPC must not have reasonable grounds to believe that the information that it contains is no longer accurate. Otherwise, the landlord or seller of a building shall be liable for a penalty charge for failing to produce an EPC, even if it can be demonstrated that the duty to obtain such a document does not apply to them.

While I am sympathetic towards the intent behind the amendment, the Government do not support it at this point. That is not because we do not support the intention, but because it is already a statutory requirement that an EPC is made available free of charge at the earliest opportunity to a prospective buyer or tenant. We intend laying regulations to come into force in the autumn that will strengthen that requirement and require the seller or landlord, or their agent, to attach a copy of the EPC to all written particulars about any building that is being offered for sale or rent.

I hope that I can assure the hon. Member for Hyndburn that his points about the internet are well made and understood and that from July 2013 it will be a requirement that all property adverts, including those on the internet, carry an EPC rating. As part of the implementation of the recast of the energy performance of buildings directive, we will also be introducing a requirement that details of a property’s energy efficiency rating are included in marketing material. It would not be appropriate, therefore, to take powers in primary legislation to introduce that requirement when there is already scope to do so through secondary legislation.

As I said at the beginning, the system that we inherited from the previous Government means that EPCs are currently valid for 10 years. I fully agree with the hon. Member for Brighton, Pavilion that that is not fit for  purpose, particularly in the context of the green deal and what we hope will be a step change in the dynamism of the interventions, technologies and costs associated with retrofitting homes. As a result, we will be consulting on that issue in the autumn as part of a wider consultation on the recast of the energy performance of buildings directive. Obviously, I cannot prejudge the consultation, but I think the hon. Lady will appreciate our sympathy for her wider case and the common sense that underpins it. The consultation will be a good opportunity properly and comprehensively to assess the likely costs and benefits of a shorter validity period for energy performance certificates and to gauge the level of support for changing it. Although I do not wish to prejudge the outcome of the consultation by amending the validity period now, I think there is momentum and a clear sense of direction behind the agenda and on what we need to do in the autumn.

We will make some changes to the content and format of energy performance certificates before the green deal is rolled out. In future, if improvement works are funded through the green deal, there will be an obligation to produce an updated energy performance certificate to capture the impact of those works on the energy efficiency of the property. One change will be to ensure that the certificate covers information about any green deal finance that has been taken out to improve the property, including the total amount borrowed, the repayments and when the loan is due to expire.

Although there will not be such an obligation if a householder or a landlord does not use green deal finance, it would be logical for them to obtain an updated EPC that reflected the benefit of that work. That would be likely to improve the marketability of the property and to make it more desirable to prospective buyers or tenants, but it is not necessary to introduce a statutory obligation to cover such circumstances.

Finally, on balance, it is not right to remove the current defence available to sellers or landlords, under which they are not liable for a penalty charge for failing to obtain an energy performance certificate if they demonstrate that the duty to do so does not apply to them. Such a situation may occur in limited circumstances—for example, where it can be demonstrated that an estate agent has contractually agreed to take on that responsibility, as it would not be appropriate for the Government to interfere with the business agreement between a seller or a landlord and their agent. With those reassurances, I hope that the hon. Lady and I are largely on the same page and that, although more detail has to be decided, she will withdraw her amendment.

Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

I thank the Minister for his comments. It is reassuring to know that we are going in the same direction, although, as ever, I want to get there a bit faster. In the light of what he has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of David Crausby David Crausby Labour, Bolton North East

Is it the intention of those who have tabled new clauses 31 and 38 to press them to a vote at the appropriate time?

Schedule 1, as amended, agreed to.