From Climate Scepticism

By MARK HODGSON

The UK faces a housing crisis. There seems to be general agreement about that. A report added to the House of Commons Library a little over a year ago recognised the problem, and cited another report, which suggested that in England alone 340,000 new homes a year are required.

There are many issues here, including the balance between home-owners and renters; a steadily rising population exacerbated by net immigration; poor quality housing stock; the hangover caused by Thatcher’s sell-off of council housing (a policy subsequently adopted by Tony Blair when Labour Prime Minister); high house prices, fuelled by years of ultra-low interest rates and quantitative easing; and high rental levels. It’s a sorry picture, to which we can add another issue, namely the limited amount of housing stock that is available for rent.

An article on the BBC website today is headlined “Renting: Number of UK homes available down by a third”. A casual reader might assume that the housing stock owned and let by landlords has fallen by a third, but apparently this isn’t the case. The key word is “available”. The article tells us that the number of homes available to rent in the UK has fallen by over a third in the last eighteen months, and the inevitable result of demand exceeding supply has been to push up rents for new tenants by 11%. The issue, we are told, isn’t that the number of properties has fallen – they have remained at a fairly constant level since 2016. Rather, the issue is far more people chasing broadly the same number of properties.

We are also told that rising interest rates add to landlords’ costs, and this is an extra factor driving higher rents. It seems that the Government has recognised the problem of rents being driven up to unsustainable levels, and we are told that it is to “introduce a new Renters’ Reform Bill in England before the summer, which it says will redress the balance in the market and provide more security for tenants.”

It’s good to know that politicians are aware of the problems, and are taking steps to deal with them. But then they go and spoil it all by doing something stupid. And of course, it’s our old friend “net zero” that’s going to exacerbate an existing problem. This week a story appeared on the Daily Telegraph website under the heading “Landlords to get five years to hit net zero targets – Buy-to-let investors face spending thousands of pounds on retro-fitting properties”. If the Daily Telegraph has the right of it, this is the story:

Landlords will be blocked from letting properties unless they upgrade them to meet net zero energy efficiency targets within five years.

Ministers are poised to announce that landlords will have to spend thousands of pounds increasing the energy performance of their properties by 2028 – or face a fine of up to £30,000.

It is understood that the Government plans to force up to two million landlords to increase the Energy Performance Certificate rating of their properties to a minimum of a C standard to help reduce the nation’s carbon footprint.

It means buy-to-let investors could have to spend thousands of pounds installing insulation or eco-friendly devices such as heat pumps and solar panels to make their properties more energy efficient.

Currently, all privately rented homes in England and Wales need to meet a minimum energy performance of band E before they can be let.

Ministers had previously proposed a deadline of 2025 for newly-let rentals to achieve an energy performance rating of at least a C, and a deadline of 2028 for all other rented properties.

Given that many private landlords don’t own their properties outright, and have borrowed heavily against their buy-to-let portfolios they, like all borrowers, are being hurt by the recent rises in interest rates. Many are leaving the market already. The BBC article cited above tells us:

Large numbers of landlords are leaving the market – 11% of homes for sale on Zoopla were previously rented.

For others, short-term lets, such as holiday lets or Airbnb, offer better returns than long-term tenants. Zoopla has seen a three-fold increase in short-term lets since 2019.

I can think of little better calculated to encourage hard-pressed landlords to sell up than the Government’s plans for the rental sector, driven by the obsessive dogma of net zero. I suppose this is what happens when we have career politicians, many of whom have never had a “proper” job, and who have little understanding of how the world works. The only positive I can derive from all of this is that the problems it will cause should rapidly become self-evident, and perhaps – just perhaps – it will be another nail in the coffin of the net zero folly.