Disseratation on Energy Performance Certificates (EPC's)

University Degree Architecture, Building and Planning

Abstract

This dissertation considers the government’s recent implementation of the Energy Performance Certificates (EPC’s) and its impact on the rental property market. A critical review of literature is included in chapter 2 of the dissertation. The review is structured into 11 different sections including; 1) Introduction, 2) Climate change, 3) Conventions and Protocols, 4) European Climate Change Programme, 5) Stern review, 6) Home Information Packs (HIP’s), 7) Energy Performance Certificates (EPC’s), 8) Political opinions, 9) Property professional opinions, 10) Display Energy Certificates (DEC’s), 11) Criticisms of DEC’s. The literature review highlights the key issues leading up to the implementation of the EPC as well as evaluating benefits and limitations.

Primary research was carried out with the aid of questionnaires as well as interviews. The questionnaires were used to obtain tenants views on EPC’s. The interviews were semi-structured and conducted with professional members of the rental property market. The results of the questionnaire demonstrated a general lack of awareness of EPC’s. The data collected from the interviews underlined key issues and concerns that had arisen with the introduction of EPC’s.

1.1 Background Information

The fundamental purpose for the introduction of Energy Performance Certificates (EPC’s) across the UK is to reduce greenhouse gas emissions. In the 21st century the need to reduce climate change has become a high priority for many of the world leaders. Secretary General of the United Nations, Ban Ki-Moon speaking at the High-Level Event on climate change in 2007 states :

“Given the nature and magnitude of the challenge, national action alone is insufficient. No nation can address this challenge on its own. No region can insulate itself from these climate changes. That is why we need to confront climate change within a global framework, one that guarantees the highest level of international cooperation.” (Ban Ki-Moon, 2007)

The European Union has introduced various measures in an attempt to meet the challenge of climate change. The Energy performance certificate is an initiative bought about from the European Energy Performance of Buildings Directive (EPBD). The Directive was published in January 2003 and the overall objective was to:

“promote the improvement of energy performance of buildings within the community taking into account outdoor climatic and local conditions, as well as indoor climate requirements and cost-effectiveness.” (DIAG, 2006)

For the EPC’s to achieve this objective effectively the following need to be examined:

Methodology for calculating the energy performance of buildings.
Application of performance standards.
Certification schemes of all buildings.
Regular inspection of boilers/heating and cooling installations.

The EPC’s became mandatory across the rented property market on the 1st October 2008. Initially the EPC’s were perceived to be a ‘step in the right direction’ with the fight against climate change. However since the EPC’s introduction they have been plagued with widespread criticism which was strongly evident in the literature review. This criticism was largely due to the poor implementation of the legislation as part of the Home Information Packs (HIPS) and the general lack of awareness by both landlords and tenants of its implications.

1.2 - Introduction

The European Union (EU) had agreed a total reduction of greenhouse gas emissions by 8% below 1990 levels during the first commitment period (2008-2012) of the Kyoto protocol. Therefore the EU launched a European Climate Change Programme (ECCP) in 2000. This was in order to establish a community strategy for the implementation of the Kyoto protocol which included the Energy Performance of Buildings Directive (EPBD).

Tackling the real threat of climate change and reducing the carbon foot print is a firm commitment for the UK. With ever rising costs especially fuel bills, the economic arguments in favour of energy efficiency are unavoidable for all the community. Buildings contribute almost 50% of the carbon emissions in the UK which is more than cars and planes. (Communties, 2007)

The UK has approximately 26 million homes and the average home emits 6 million tonnes of CO2 annually. Statistics show that if everyone with gas central heating simply installed a new condensing boiler, carbon emissions would be cut by 13.7 million tonnes annually. The savings on fuel bills would be approximately £1.6 billion and this could provide sufficient energy to heat a further 3.7million homes a year. (WWF, 2008) Furthermore as it is widely published the UK government has set a firm goal of cutting the carbon dioxide emissions. It plans to cut emissions by 60 per cent from the 1990 levels by 2050 and hopes to achieve real progress in reducing the emissions of between 50–75 million tons of carbon by 2020.

EPC’s have been introduced to provide the ratings for both energy efficiency and environmental impact (i.e. the amount of carbon dioxide being released into the environment.) of properties in the UK. An example of the ratings is below.

Figure 1.0: A typical energy performance certificate

Since 2008 legislation has made it mandatory for a seller and a landlord of a property to provide an EPC. Before an EPC can be provided an assessment of the property has to be undertaken by a Domestic Energy Assessor (DEA). Buyers and tenants can therefore now gauge the energy efficiency and the environmental impact of the property before they decide to purchase or rent. EPC will provide them with a summary of the energy performance of the property in relation to features of, construction, heating and hot water as well as its environmental impact. It will also make a list of recommendations to improve the energy efficiency of the property.

Buyers and tenants will now have detailed information of the property’s energy efficiency so that they can make a more informed decision before deciding to purchase or rent. It is also hoped that EPC will encourage sellers and landlords to make more positive changes to their properties so that they are more energy efficient and have less impact on the environment, therefore making them more saleable or rentable.

With regards to the rented market the EPC and the recommendations must be made available free of charge by the landlord to a prospective tenant at the earliest opportunity and no later than:

when any written information about the building is provided in response to a request for information received from the prospective buyer
when a viewing is conducted of the rental property; or
if neither of those occur, before entering into a contract to let the property.

However an energy performance certificate does not have to be available if :

the landlord or his/her agent or representative believes that the prospective tenant is unlikely to have sufficient funds to rent the property or is not genuinely interested in renting that type of property.

Clearly the introduction of the EPC’s for landlords can potentially have a significant impact on the potential letting .Since its introduction in October 2008 the EPC has been regarded as a ‘shambles’ by many property professionals. The Royal Institution of Chartered Surveyors (RICS), who represent property professionals and surveyors believe that the government’s implementation of the EPC will have significant financial impact on consumers. (RICS, 2008) Furthermore the RICS believe that the typical car journey to each marketed/rented property purely for producing an EPC will negate any potential environmental benefits of having the EPC.

For many landlords the EPC has been seen as an ‘extra cost implication’ for themselves and does provide any benefit to them. An important question is whether the government has done enough to educate the tenants about the contents of the EPC’s. An important agenda is making people aware of energy efficiency and how to reduce there carbon emissions. All these issues will be explored in detail in this dissertation.

1.3 - Aim

The aim of the dissertation is to investigate and consider the following:

Public awareness and opinion on the Energy Performance Certificates (EPC’S)
The reaction of the rented property market surrounding the implementation of the EPC’s.

1.4 - Objectives

To determine the extent of landlords and tenants awareness of the recent introduction of EPC’s.
To determine the personal opinions of landlords and tenants on the implications of the EPC’s.
To analyse the reasons that had lead to the implementation of the EPC.
To evaluate common criticisms associated with the implementation of the EPC legislation.

2.1 - Introduction

The following literature review will consider the implications of Climate Change that have made it necessary for Energy Performance Certificates (EPC’s) to be introduced. To enable us to understand the reasons for the EPC’s we have to look at existing past treaties and protocols that have been implemented to reduce greenhouse gas emissions. Also documented in the literature review will be a more detailed view of EPC’s and varying opinions from both political figures and property professionals.

2.2 - Climate Change

Climate change has been an instrumental factor in the government’s decision to introduce EPC’s to the United Kingdom Property market. Buildings contribute nearly 50% of the carbon omissions in the UK which is greater then cars and planes combined. (Directgov, 2009) The UK has placed a 60% reduction target for carbon dioxide emissions by the year 2050.

Climate change refers to the change in weather average weather patterns experienced over a long period. Climate change has been a significant issue in recent times with a number of treaties taking place around the world involving many of the world’s leaders. Earth has increased in temperature by 0.74 degrees over the last 100 years. (Defra, 2005)

The major influence on the global climate is the greenhouse effect and emissions of greenhouse gases. The greenhouse effect is described as the natural process by which the atmosphere traps some of the suns energy, subsequently warming the earth. (BBC, 2006) These gases include carbon dioxide (CO2), methane, nitrous oxide and the chlorofluorocarbons (CFCs) used in air conditioners and many industrial processes. The build up of these gases in the atmosphere enhances the greenhouse effect.

Approximately 7 billion tonnes of carbon dioxide are released into the atmosphere globally each year through fossil fuel use. (CNN, 2003) This leads to global warming which is a build up of these gases that collect in the Earths atmosphere trapping the suns heat subsequently causing the planet to warm up. (NRDC, 2005)

As far back as 1896 a Swedish chemist, Svante Arrhenius suggested the idea that Carbon dioxide emissions from the combustion of coal enhanced the greenhouse effect. (Climate change, 2001) Scientists now indicate that carbon dioxide contributes approximately 50% to the greenhouse effect while the other greenhouse gases make up the rest. The gas is emitted into the atmosphere through burning fossil fuels, deforestation of the planet and humans exhaling. It is estimated that 30 billion tonnes of carbon dioxide are released in to the atmosphere per annum by these processes. (Hopwood, Cohen, 2000)

Methane gas enters the atmosphere with the raising of livestock, coal mining, oil and natural gas operations and agriculture. The gas can contribute considerably to the greenhouse effect as it estimated that it traps 20 times more heat than carbon dioxide. It is indicated that methane emissions account for 9% of the total emissions in the atmosphere. (EIA, 2009)

However there is also proof to suggest that global warming is not only caused by humans but also by natural causes. These natural causes generally result from changes in the earth itself, such as the change in orbit of the earth and depending on the distance the earth is to the sun. Robert Watson in his article suggests that global warming would perhaps be occurring “without the intervention of human involvement.” However he follows on to suggest that the presence of greenhouse gases would strongly boost or enhance the greenhouse effect. (Watson, 2007)

2.3 - Conventions and Protocols

The first international convention that was set up was the Vienna Convention for the protection of the Ozone layer. This framework treaty was signed by 22 countries in 1985 and was set up to protect human health and the environment against from the adverse effects resulting from human activities which are likely to modify the ozone layer. (UNEP, 2004)

Subsequent to the Vienna convention, the Montréal protocol was established in 1987 and principally examined the substances that deplete the ozone layer. The protocol looked into the production and consumption of compounds that reduce the ozone in the stratosphere. The protocol was signed by 24 countries and was bought into place to reduce chlorofluorocarbons (CFCs) and halons. The former secretary General of the United Nations, Kofi Annan, describes the Montréal protocol as

“the single most successful international agreement to date”

(The ozone hole, 2007)

However in February 1995 the Kyoto protocol to the United Nations Framework Convention (UNFC) on Climate Change was introduced. This was an international agreement between countries worldwide to limit emissions of greenhouse gases and was signed in December 2007 by 175 countries. The target of the protocol was to reduce greenhouse gases by 5.2% below that of the levels emitted in 1990. (UC, 2008) The protocol authorized developed countries to engage in emissions trading in order to meet their emissions targets. Although the Kyoto protocol was the first fully implemented international agreement, since its adoption the protocol had encountered stiff opposition from some countries, most importantly the United States of America, which produces approximately a quarter of the world’s carbon emissions. The international panel on climate change (IPCC) warned at the conference that:

“If the increase of greenhouse gas concentrations is not limited, the predicted climate change would place stresses on natural and social systems unprecedented in the past 10,000 years.”

This was the warning forecasted by top scientists at the IPCC panel in the Kyoto treaty. In relation to EPC’s this statement was an important incentive for all countries to take more action on reducing climate change. It was this protocol that had an initial major influence on the phasing in of EPC’s.

2.4 - European Climate Change Programme

Subsequent to the implementation of the Kyoto protocol the European Union (EU) agreed to a cut down greenhouse gas emissions by 8% below 1990 levels. In 2000 the European Commission launched the European Climate Change Programme (ECCP). An initial ECCP report suggested cost effective measures for the reduction of green house gas emissions. The objective of the ECCP was to identify and develop all the necessary elements of an EU strategy to implement the Kyoto Protocol. A fundamentally important topic of discussion was with improving the energy performance of buildings. A new directive on energy performance of buildings was recommended. This directive was referred to as the Directive 2002/91/EC on the energy performance of buildings directive (EPBD). (G.V.Cruchten and C.A.Balaras, 2007) The EPBD was enacted to reduce European building energy consumption by 10% by 2010 and 20% by 2020.

This was the most significant legislation that came out relating to environmental performance and sustainability. The principal aim for the introduction of the EPBD was to promote the improvement of energy performance in all buildings across Europe. An important EPBD initiative is to develop energy rating systems and c

certifications for all buildings that came under the directive legislation. The legislation requires that EPC’s are required when buildings are constructed, sold or rented out. (European Commission EPBD, 2008)

However there has been certain controversy with the new proposal to implement the Energy performance of buildings directive across Europe and criticisms from various key professionals in England. Joe Valente, director of research at DTZ, the commercial property consultant states that ‘the regulations could trigger a big cost to landlords’ due to the additional costs for all landlords to obtain an energy performance certificate.

2.5 – Home Information Packs

The housing act 2004 introduced a new requirement for the seller of a property or agent to prepare a home information pack (HIP) prior to marketing. The legislation became mandatory on 10th September 2007 and provides the buyer with key information on the property. The main objectives of the packs were outlined by the government. These included improving the buying and selling process, providing consumers with better information at the right time, reducing waste costs, improving the buying and selling process and fundamentally reducing carbon emissions. (OPSI, 2006)

The required documents for the HIPS are:

Home Information Pack Index
Energy Performance Certificate
Sustainability Information
Sale statement
Evidence of title

However there had been stiff opposition from the RICS who express deep disappointment in the introduction of HIPS. They believe that the policy will have “adverse effects on the market, on consumers and on small businesses.” (RICS, 2007)

2.6 - Stern Review and Climate Change Act 2008

In October 2006 economist Sir Nicholas Stern released a review on the economics of climate change (Stern review) which discusses the effects of climate change on the world economy. The review highlighted the impacts of climate change and on the economic costs. In his report Lord Stern warns that:

"our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th Century". (BBC,2006)

The recommendations outlined in his report include a requirement for carbon pricing, technology policy and energy efficiency. Also the incorporation of new carbon emission reducing schemes to promote cost-effective reductions in emissions. (Guardian, 2006)

Interlinked with the Stern report the government issued a new piece of legislation titled the Climate Change Act 2008. Lord Adair Turner, chairman of the government’s Climate Change committee says that:

“The building management industry must wake up because there will be real costs. It’s crucial that industry leads with its own response. (Estates Gazette, 2008)”

The implementation of the Act was passed into law and revisions were also made to the existing Building Regulations Part L to indicate the new energy requirements. The Climate Change Act commits Britain to slashing greenhouse gas emissions and all other gases under the Kyoto agreement. Ed Miliband, secretary of state for energy and Climate Change announced the act would authorize an 80% cut overall in six greenhouse gases by the year 2050. (Financial Times, 2008) The UK is the first country in the history to propose this legally binding framework to reduce carbon dioxide emissions.

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2.7 - Energy Performance Certificates (EPC’s)

The introduction of EPC’s across the United Kingdom was principally based on the recommendations from the Stern report and was implemented along with the Home Information Pack.

EPC’s give prospective buyers or tenant’s information on the energy efficiency and carbon emissions of a building. From the 1st October 2008 all sellers and landlords are to provide EPC’s for all buildings when they are sold or rented. (H.M Government, 2008) The rented property market requires that any accommodation used for letting or sub-letting will have to include an EPC for the energy performance of the accommodation available. The prospective seller or landlord has a duty to ensure there is an EPC available for the accommodation being sold or let.

The introductions of EPC’s are a crucial weapon in the fight against climate change. Paul King chief executive of UK Green Buildings council suggests:

“They are the building blocks on which to make progress in tackling emissions from our existing homes and buildings. It's now crucial we give a clear and consistent message to the industry that there is a stable policy landscape in which to take the necessary investment decisions”. (Communities, 2008)

EPC’S comprise an asset rating which is produced by the measurement of the fundamental performance potential of the building by using standard energy performance model based on a national calculation scenario. These are carried out by accredited Domestic Energy Assessors who need to become familiar with the internal layout of the building, the construction, its design implications, services and lighting controls used. The assessors are required to do this to understand the demands of each space and to further analyze the information. (Building Sustainability, 2008)

The data collected by the assessor is then entered into approved software from which the EPC is created. The software, the Simplified Building Energy Model (SBEM), is a programme that provides an analysis of a building's energy consumption, calculating energy use and carbon dioxide emissions. (Campbell, 2007)

When the inspection is conducted a list of cost-effective recommendations are suggested which will improve the energy efficiency of the property. However these recommendations are not compulsory for landlords to implement. The report also includes additional information for the landlord with the approximate cost of the recommendations, typical savings per year and the performance rating after improvement. (H.M Government, 2008).

The EPC remains valid for up to 10 years and for the rented property market the certificate will still be valid if the tenants change in this period.

2.8 - Political Opinions

New research undertaken by communities and the local government indicate that a startling 79% of people renting a home are anxious about their household bills.

The under secretary of state, MP Iain Wright who is in charge of Climate Change and sustainable development indicates that this is where energy certificates can have a major influence:

“ For the first time tenants and buyers will be able to choose a property based on its energy efficiency…landlords and tenant, buyers and sellers will all have at their finger tips vital information about a building’s energy consumption, along with practical recommendations about what to do to improve energy efficiency.”

2.9 - Property Professional Opinions

The speech given by Iain Wright highlights the benefits energy performance certificates will have to tenants, buyers and landlords. However Paul McNamara, head of research at Prudential Property Investment managers suggests:

“For property assets that score badly, it should impact the let-ability of assets, increasing uncertainties and void periods, and potentially lower the future rent payable on the building and increase depreciation.” (Times Online, 2005)

This indicates that the introduction of the energy performance certificates may in turn cause a negative effect on property rents which may be a benefit to tenants but a drawback for landlords.

Furthermore one of the UK’s leading letting agent trades body has suggested that energy performance certificates may cause friction between landlords and tenants in the near future. Ian Potter head of operations at the association of residential lettings agents says:

“Tenants will think that, because they have an EPC, the landlord will have to do something if the property has a poor energy efficiency rating, when that will not be the case”(Guardian, 2008)

This viewpoint is also shared by Elizabeth Brogan, policy officer for the National Landlord Association who feels that the certificates could deceive tenants as to the running costs of their accommodation.

“The certificates will give an average rating as to what the running costs are, but the actual bill be very much down to individual tenants and their activities”(Guardian, 2008)

Both these opinions suggest that the EPC’s will bring an element of confusion between landlords and tenants which may in turn cause unnecessary disputes. Other indications suggest that tenants may be placing unrealistic demands for landlords to comply with. (Guardian, 2008)

Furthermore it seems as though Landlords will pay the price for the introduction of EPC’s. Andrew Garvey and Malcolm Dowdem from Clarkslegal LLP argue that landlords will have great difficulty recovering EPC costs from tenants via the service charge. The government indicates that landlords will be compensated with higher rents for more efficient homes.

However Garvey and Dowdem disagree and believe that the rental income from tenants may in fact contradict the governments forecast.

“Improving the performance of buildings would merely preserve rent levels, with tenants arguing strongly for rent reductions where the rating of a building is poor.”

This opinion suggests that EPC’s could cause confrontation between the landlord and tenant and could possibly build a negative relationship.

Another criticism of the EPC’s is focused on the recommendations made by the Domestic Energy Assessor (DEA). Following a joint survey undertaken in January 2009 by Building magazine and the Chartered Institute of Building Services Engineers, it was established that only 21% of Landlords implemented the recommendations of the DEA. (Building, 2009)

In 2009 a report was released by Minna Sunikka, head of the research institution for housing, urban and mobility at the University of Technology in Delft. The report was entitled “Energy performance of buildings directive: effectiveness of the application on the existing house stock in the UK”. The report indicated that only 30% of the annual property transactions for the private rental market were complied with. Furthermore with the energy efficiency measures recommended only 2% were adopted. The report goes on to suggest that these low figures are due to the lack of public awareness in the UK property market of the EPC report and the unwillingness of landlords to pay for the recommendations. In concluding the report indicated that information on energy performance alone is not likely to be a renting factor for tenants in the current housing market. (Sunikka, 2009)

2.10 - Display Energy Certificates (DEC’s)

Display energy certificates (DEC’s) give the opportunity to the public to raise awareness of energy consumption in all public buildings. DEC’s are required for all public authority buildings with over 1000 meters squared. (RICS, 2008) This also has the benefit of educating people about energy efficiency in a simple format. The main differential factor between these certificates and EPC’S is that DEC’S indicate the actual annual energy usage of the building where as EPC’S rate the energy performance of the building. (N.Jacobs, 2008)

The certificates also display an energy rating between A and G like the energy performance certificates discussed in the previous section. However if buildings over a 1000 squared meters do not have a certificate by January 2009 then they risk a fine in the region of £1,000. (Property Week, 2008)

The DEC must be displayed in a public place and will also provide asset rating and operational ratings. The asset rating is simply a ‘numerical indicator of the amount of energy estimated to meet the different needs associated with a standardised use of a building’ (CEPC, 2008) The operational rating is a ‘numeric indicator of the amount of energy consumed during the occupation of the building over a period of 12 months’(CEPC, 2008).

MP Iain Wright suggests the certificates will have a positive outcome:

"Display Energy Certificates are a valuable tool in the fight against climate change, with this ambitious programme showing how building performance can be improved, saving not only carbon, but public money," (Business green, 2008)

2.11 - Criticisms of DEC’s

However there has been strong criticism of the implementation of the new system by the government. The government spent an approximate £10m promoting the launch of the display energy certificates. (Property week, 2008) However many of London’s high profile and government buildings have been given energy ratings of F and G these include the National History Museum and the Bank of England. Matt Bell director of campaigns for the commission for Architecture and the Built Environment (CABE) states in his article that:

“The palace of Westminster pumps out 11,983 tonnes of carbon dioxide each year. That’s not much of a platform from which to urge your constituents to insulate their homes (Building, 2009)”

This strong criticism has been seen as an embarrassment for the government especially as some of London’s most iconic buildings have been given such a low energy rating.

3.1 - Data collection

The literature review in the previous section had given the author a solid platform to undertake research on the EPC’s and the view of the rented property market. Research into the views of the rented property market were required from landlords, tenant and a Domestic Energy Assessors (DEA). The author had undertaken research findings in several different ways:

Firstly quantitative research methods were incorporated with the use of questionnaires. The questionnaires would be delivered by the author to tenants in the properties across the Reading area.

Secondly, three qualitative interviews were to be conducted with selected landlords in the Reading area. The three interviews were to be held with private organisations including two letting agency landlords and one smaller private landlord.

A further interview was to be conducted with a domestic energy assessor (DEA). This was primarily to obtain there viewpoint on the EPC and its effect on the rented market.

3.2 - Primary data collection

Primary data allows the researcher to gain specific up-to-date data. Both quantitative and qualitative research methods have been incorporated into this research. Pre-determined samples were taken from properties owned by the author’s family. The tenants were classified between professionals and students to distinguish their knowledge and views on EPC’s. The samples were chosen due to the high response rate that would be envisaged.

The properties that were selected for sampling by the author ranged from a mixture of student and professional lets of 4 – 6 bedroom terraced houses.

Four semi - structured interviews were conducted to obtain qualitative data from the landlords to find out there personal views on the EPC’s and to ascertain how it has affected them. Two of these interviews were carried out with letting agency landlords and one was conducted with a private landlord. The rational behind this was because the letting agency landlords had a greater number of properties than the private landlord, it was anticipated they would have a different perspective on the EPC’s. Both the questionnaire and the interview will be discussed in the later section in more detail.

There are a number of other primary data collection techniques that could have been used in obtaining data. For example focus groups which are a form of group interview that capitalises on communication between participants in order to generate data. It

gives the opportunity to access data quickly and conveniently. (Kitzinger, 1995) However an underlining limitation of focus groups is that they significantly limit the personal views of the individual respondents.

3.3 - Secondary data collection

Secondary data is fundamentally predetermined and dated. This data was collected in the literature review previously discussed. The review provided an insight into the views and attitudes of property professionals, landlords and political figures in relation with EPC’s.

3.4 - Quantitative data collection

This data was collected using a pre-determined sampling approach. The respondents were tenants from properties across the Reading area, predominantly the University area. The aim of the questionnaire was to get the views of the tenants who are directly affected by the implementation of the EPC’s. These results could then be analysed further to determine tenant’s knowledge and personal views on the topic. The quantitative questionnaire was firstly handed to 10 respondents in two properties to get their views on the layout as part of the author’s pilot study. This was required as the questionnaire design can be fraught with difficulties and the author is unable to assume that it will be accurate first time.

A pilot study has been described as:

“getting the bugs out of the instrument (questionnaire) so that subjects in your main study will experience no difficulties in completing it….” (Bell, pg 84)

Following on from the pilot study the personal views of the 10 respondents on the overall design and use of the questionnaire were discussed. The pilot questionnaire was based on information gathered from issues raised in the literature review and was distributed along with a comment sheet. The respondents commented on the following:

Layout
Choice of questions
Ease of use
Ambiguous data
Length of time taken to complete questionnaire
Additional comments

3.5 - Questionnaire Design and delivery Method

During the design of the questionnaires caution was taken to prevent the questions from being too complex, intrusive or misleading. The manner in which the questions were written was clear and concise. The questions chosen in the design process included a mixture of open and ended questions. This range included both factual and opinionated questions.

The need for using open ended questions was to allow the respondent to elaborate upon an earlier more specific question. They give the respondent the opportunity to express their views. (Naoum, 1998) The questionnaires were handed out on the 26th March 2009 and collected the following day (appendix 1).

Closed ended questions however were used to get simple factual data back from the respondents. Furthermore they provide definitive answers without giving the respondent any uncertainty.

The data collection was gathered by using simple tick boxes, checklists and Likert scales. Likert scales are used as a common method for rating scales. The author has employed a rating scale from ‘1’ to ‘5’ to distribute the respondents answer from how much they agree or disagree with the question at hand.

No covering letter was produced as each of the tenant respondents were told verbally what the study was designed to achieve. The author felt that verbal communication was far superior than a written letter as it would make the tenant feel more involved and obliged to participate with the questionnaire. The tenants were briefed on the questionnaire and informed that they would be picked up the following day. The drawback of this was that the respondent would either fail to complete the questionnaire or forget its purpose.

3.6 - Qualitative data collection

Interviews are simplified as a conversation that entails a structure and a purpose. It goes beyond the spontaneous exchange of views as in everyday conversation but becomes a careful questioning and listening approach with the purpose of obtaining tested knowledge. (Kvale, 1996) There are many advantages for using interviews and the underlining reason for the authors choice was the in depth information that could be obtained.

All four interviews were undertaken to produce reliable and concise data in which I could analyse further in later chapters. Three of the interviews conducted were with professional backgrounds. These include one small scale landlord and two larger letting agency landlords. The main purpose was to ascertain whether there are any similarities and differences in their views. The fourth interview was conducted with a DEA to assess her views on the implications on landlords and tenants in relation with EPC’s.

All interviews were pre-arranged at the convenience of the Interviewee and were carried out face to face. The purpose of the interview is to get a detailed account of the topic and as much accurate information as possible as stated by (Silverman, 1997);

“the purpose of the interview is to obtain a rich, in-depth experimental account of a topic to the knowledge of the respondent”

3.7 - Interview Conditions and delivery method

It was decided that the most appropriate method to adopt for interviewing was with a semi-structured approach. This was due to the choice of using both ‘open’ and ‘closed – ended’ questions during the interview. Furthermore it allowed the author to obtain more knowledge regarding specific issues related to EPC’s by ‘probing’ for additional information. Wengraf (2000) describes semi-structured interviews as:

“where research and planning produce a session in which most of the informant’s responses can’t be predicted in advance and where you as an interviewer therefore have to improvise probably half of your responses to your initial prepared questions”

This approach additionally allows the interview to go at its own pace without restricting the interviewee to certain responses.

“The process involves asking indirect questions in order to build up a rapport with the respondent and then explore specific issues….” (Naoum, 1998)

However there can also be drawbacks of using semi-structured approach to interviewing. When it comes to further analysing of the results it may be difficult to manipulate the results into a statistical form of data. Furthermore the probing approach of trying to find out additional information from the interviewee may mean that ever each interview is slightly different. Subsequently this could mean that comparing and contrasting answers may be more difficult.

A face to face interview was especially conducted with the domestic energy assessor. The reasoning behind this interview was to establish her in depth views of the rented property market and the implications that EPC’s would have on landlords and tenants.

3.8 - Method Combination

The two different methods of data collection are intended to fulfil different aims of the research. The quantitative data is aimed at the tenants on the implications of EPC’s on them wheras the qualitative data focuses on the implications of EPC’s on landlords. (Bryman 2008) explains the use of using both methods.

“Mixed methods research is used as simple shorthand to stand for research that integrates qualitative and quantitative methods” (Bryman, 2008)

Bryman here suggests how both methods of research can work together.

Questionnaires were used by the author to reach a large number of respondents in a limited space of time where as interviews were used to gather more in-depth opinions.

3.9 - Method of Analysis

The author chose to use simple bar charts and pie charts produced in the Statistical Package for the Social Sciences (SPSS). This approach was used to compare the data for each of the questions in the questionnaire. This form of data display can be useful for displaying values gathered for two or more data sets. (Holtom, 1999) The bar chart further enables large sets of categorical data to be displayed within one chart.

For further statistical analysis the author had chosen to use the Spearmans Rank approach which identifies the correlation coefficient of two separate variables of data in SPSS.

The author chose to use a coding process to analyse the interviewee’s responses. The method was used to transform the raw data from the questions into a form which could be analysed efficiently. The advantages of using the pre-coding method is that it cuts time and costing of data handling and also eliminates errors. (Northcutt, 2004) Within the coding process common themes from the interviews needed to be identified. These themes are summary statements and explanations of what is going on within the interview. They can be compared and contrasted across the all the interviews. (Rubin, 2005) The identification of themes is illustrated in appendix 6.

4.1 - Introduction

The findings from the primary data collected should enable the author to determine the impact EPC’s have had on the rented property market.

The first section analyses data from the questionnaires that were collected from the properties owned by the author’s family. The author received back 54 out of 60 questionnaires that were distributed. This gave an extremely high response rate of 90%.
The second section discusses the major findings drawn from the questionnaires.
The third section analysed the four semi-structured interviews which were conducted with property professionals and a Domestic Energy Assessor. (DEA). The analysis was conducted using a pre-coding method. The identification of themes within the interview transcript can be viewed in the appendices.

4.2 - Questionnaire Results and Analysis

Question 1

How long have you been a tenant in this property?

Analysis of Question One

The bar chart clearly shows that 37% of the tenants had been in the property for 6 – 12 months. Furthermore 33% of the respondents had been a tenant in the property for 0 – 6 months and 30% had been in the property for more then 12 months. These results suggest that are a similar number of respondents in all three categories.

Question 2

What is your Occupation?

Analysis of question Two

The following results show that there was only 2% difference in the number of respondents that are students compared to the number that are professionals. This gave the author a good range of data for further analysis. The questionnaire also had an extra tick box which included ‘other’. However as there was no response from the respondents it was decided by the author to omit it from the bar chart.

Question 3

What factors influence your choice of rented accommodation?

Analysis of Question Three

The pie chart shows that 50% of the respondents were strongly influenced by the location and cost of the property. A further 32% of the respondent’s choices were influenced by the quality of the property and the facilities that are available. This left the remaining 18% of the respondents who were influenced by transport and connectivity.

The purpose of the question is to determine the major influences that currently attracted tenants to properties and preparing the respondents to the main question on EPC which was to follow..

Question 4

Are you aware of energy performance certificates?

Analysis of Question Four

The pie chart showed that 63% of the respondents were not aware of EPC’s. This was a significant statistic as EPC’s had been introduced across England in 2007 and were made mandatory from 1st October 2008. However only 37% of tenants that responded to the questionnaires were aware of the certificates.

From the responses the author also wanted to understand whether the occupations of the respondents had any bearing on the awareness of the EPC.

The results above indicate that there is no difference between students and professional’s awareness of EPC’s. Out of the 20 tenants that were aware of EPC’s 10 were students and 10 were professionals. The purpose of this data display was to prove whether there was a significant difference in the knowledge of the respondents.

Question 5

Which statement best describes how much you know about Energy Performance Certificates?

Analysis of Question 5

The author had created the above pie chart to interpret the level of understanding of EPC’s on the respondents. Question five was only answered by the 20 respondents that answered ‘yes’ to question 4 (awareness of EPC’S). The pie chart clearly indicates that of those respondents who were aware of EPC’s 50% had ‘little knowledge’, 25% had ‘some knowledge’ and the remainder 25% had ‘Good sound knowledge’.

Question 6

How important do you consider energy efficiency when choosing which property to rent?

Analysis of Question 6

From the results above we can determine that 65% of respondents believe that energy efficiency is ‘reasonably’ to ‘very important’ when choosing accommodation to rent. Furthermore 30% of respondents felt that energy efficiency is a slightly important factor when choosing accommodation to rent and 5% felt that it was not important.

The question conducted by the author can further be analysed using the pseudo-average approach. This technique is used when statistically analysing likert scales. The pseudo average is:

3(1) + 16(2) + 18(3) + 13(4) + 4(5) = 2.98

Both the 65% from the results and the 2.98 established from the pseudo average could be used to analyse the responses from tenants on a year by year basis. In this way the tenant’s views could be tracked to determine whether they consider energy efficiency more importantly in the following years to come.

Question 7

Would you be willing to pay higher rent costs if you could save money on your fuel bills?

Analysis of Question 7

From the bar chart above it is clear that 61% of the respondents would be prepared to pay higher rent costs if they were able to save money on there fuel bills compared to just 39% who would not.

This response could be seen as an incentive for landlords to provide more energy efficient properties. The tenants could save on there fuel bills including heating and other domestic bills and simultaneously landlords could be charging higher rents for more energy efficient homes.

Question 8

Should Landlords be force to improve the energy efficiency of rented homes?

Analysis of question 8

It is illustrated that over half of the respondents believe that landlords should be forced to improve the energy efficiency of rented homes. Currently it is the decision of the landlord whether they want to improve the energy efficiency of their property.

In contrast only 11% of tenants do not believe that landlords should be forced to improve the energy efficiency. The remaining 33% ‘don’t know’ whether they should be forced to improve the energy efficiency. The explanation for this could be that the respondents were not concerned or they were unaware of the implications of energy efficiency on properties.

In the literature review discussed earlier Ian Potter head of operations at the association of residential lettings agents highlighted a limitation of the EPC. He indicated that the EPC would give a false impression to tenants. He followed on to suggest that their viewpoint would be that if a property had a poor energy rating then it would need to be improved by the landlord. The high percentage of respondents that answered ‘yes’ to question 8 in the questionnaire would appear to agree with this viewpoint.

4.3 - Major Findings

4.4 - Awareness

The author’s findings illustrated that 63% of the total respondents were unaware of energy performance certificates. Despite the fact that EPC’s have more of a direct implication on landlords it seems as though the majority of tenants are unaware of the legislation. This figure suggested that the government’s initiative to make the public more aware of EPC’s is not working. If the tenants had the knowledge that EPC’s were obligatory then a higher percentage may be more aware. The government have spent an estimated £4.7 million introducing EPC’s according to the Freedom of information Act. (Building, 2008.)

Furthermore of the 20 respondents who were aware of EPC’s the vast majority had a little knowledge of the subject. Only 25% had a good sound knowledge. This indicates there is a strong requirement for the government to initiate more public awareness especially with tenants of existing properties.

4.5 - Energy efficiency

One of the key issues raised from the questionnaire was with the respondents views to energy efficiency. The author reported that 65% of the respondents viewed that energy efficiency was ‘reasonably’ to highly ‘important’ when choosing accommodation to rent. Furthermore 30% of respondents indicated that energy efficiency was ‘slightly important’ and a further 5% viewed it as ‘not important’ when considering accommodation to rent.

The data collected revealed that the pseudo average is 2.93 meaning that energy efficiency is ‘slightly important’ to respondents when choosing a property. However a reasonably high number of tenants regarded energy efficiency as a high consideration. But this does not reflect the correlation with the percentage of respondents who are aware of energy performance certificates. It would have been presumed that respondents who consider energy efficiency important when choosing accommodation should also be aware of energy performance certificates.

A further 56% of respondents believe that landlords should improve the energy efficiency of properties. Currently the recommendations set out in the EPC’s are not mandatory and (as discussed in the literature review) it is the landlord’s discretion whether to provide a more energy efficient property. Clearly with a high response of tenants indicating that landlords should improve the efficiency of properties, we may see more pressure on the landlords in the future to improve their energy efficiency.

4.6 - Costs

Another key issue raised with the analysis of the data collection was with the high number of respondents willing to pay higher rental costs if fuel bills could be reduced. The author had established that this figure accounted to 61% of all respondents.

From the results obtained in a previous question location and cost were the two most influential factors affecting the respondent’s choice of rented accommodation. The author’s findings however have interestingly illustrated that 24% of respondents viewed cost as the most influential factor. However 61% of the respondents also would be prepared to pay higher rental costs if fuel bills could be reduced.

4.7 - Correlations

The author chose to use Spearman’s rank statistical analysis approach to determine whether there are any correlation coefficients between the data.

Table 1 – Respondents awareness of energy performance certificates and respondents that believe landlords should be forced to improve the energy efficiency of rented homes

The above table shows two different variables. A correlation coefficient had been calculated between respondent’s awareness of EPC’S and whether landlords should be forced to improve the energy efficiency of rented homes. The two different variables showed a positive correlation of 0.232 which is statistically significant at p = 0.091. Therefore there is strong evidence to suggest that there was an association between the two variables. This indicated that respondents who stated they were aware of EPC’s also wanted landlords to improve the energy performance of rented homes.

Table 2 – The occupation of the respondents and the respondents willing to pay higher rent costs if they could save money on there fuel bills

A correlation coefficient has been calculated to assess between the occupation of the tenant and the respondents willingness to pay higher rent costs if they could save money on there fuel bills. The correlation coefficient gave a figure 0.028 which is not statistically significant at p = 0.838. Therefore the findings of spearman’s rank showed there was no association between the two variables. The purpose of the test was to determine whether students and professionals views in relation to paying higher rent costs were different.

The author was unsurprised at the result, due to earlier analysis which indicated there was no significant difference between students and professional’s awareness of EPC’s

4.8 - Analysis of Interviews

The questions conducted by the author in the semi-structured interviews were all of similar nature. Two of the landlords interviewed were with letting agencies and an additional one was conducted with a private landlord. A further interview was undertaken with a Domestic Energy assessor (appendix 5), this was to enable the author to get an external opinion.

The analysis of the interviews was undertaken using a coding approach which was discussed previously in the research design section.

4.9 - Awareness

The lack of awareness of tenants with EPC’s was highlighted in the analysis of the questionnaire. However this theme was also particularly common across all the interviewees. When discussing this issue with Kalil Iqbal (appendix 2), branch manager of Adams Estates, there was clearly an underlining issue of many tenants being unaware of the implications of EPC’s. Kalil compared the awareness of the certificates with that of the tenant deposit scheme which was implemented several years ago. ‘The majority of tenants know about them now as there is plenty of information in literature. However at the time tenants were unaware of the implications.’ In the interview he indicated that it takes time for people to become aware of these new schemes. Kalil’s viewpoint was shared by Satinder Kaur (appendix 4), a private property developer in the Reading area and Chaz Shukla (appendix 3) owner of Westgate Lettings. However Chaz promoted the need for tenants to become more educated with EPC’s as part of his response to question 8. Furthermore his viewpoint bought a different perspective in to the discussion as he suggested that a high number of tenants tend to be of ethnic background and even if they became educated and aware on the rules and regulations ‘whether they care enough is another issue.’

However their opinions differed to that of Karen Bartlett, a self-employed domestic energy assessor, who believed that people are now becoming more aware of the implications. Initially Karen Bartlett was of the opinion that the promotion of EPC’s was a shambles because it was initially introduced as part of the Home Information Pack (HIP). Her view has now changed and she believes that tenants have become more aware of the emissions rating chart that EPC’s provide and there has been more advertising especially on local radio. Furthermore in her response to question 5 she suggests that several tenants had recently stated they were not going to rent a property with a storage heater due to the high energy emissions released.

However in response to question 8 Kalil expressed the need for more advertising of EPC’s and the requirement to make tenants more aware so they view an EPC rating before they view a property. ‘If tenants see the EPC before they go on a viewing they know what there in for as such.’

4.10 - Policing

The theme of policing was common throughout the responses of the interviewees. As previously discussed in the literature review EPC’s are valid for 10 years but there are no national or local rules and regulations in place to make the recommendations that are listed in the EPC report mandatory. Furthermore without any stricter regulations it has become apparent that EPC’s are regarded as more of an unnecessary formality to landlords.

In response to question 6 on the benefits of EPC’s out weighing the cost implication, Kalil suggests that there is no governing body overlooking whether any of the recommendations will be implemented. He followed on to suggest that time limits needed to be placed on improving the energy efficiency of properties. He compared this with the Houses in Multiple Occupation (HMO) licensing where landlords had to abide by certain criteria in three years to obtain the license. ‘If it was done on a recommendation plus a deadline to complete the works then I would say yes the benefits may out way the costs.’

This response by Kalil was further supported by Chaz Shukla in his response to question 5 on the benefits of the EPC’s. He did not believe that he would feel the benefits of the EPC’s ‘as there is no one policing it’ consequently there would be no real incentive to do anything. He added that it doesn’t even effect the tenants as no tenants ask about the implications of the certificates.

The views offered by both letting agency landlords were supported by the DEA in her response to question 3. Karen suggested that ‘until landlords were forced to make changes according to the recommendations I don’t feel that the EPC will be a success’

Furthermore Chaz suggested that EPC’s are simply a value in a rating table and ‘there is no pass or fail method’ and there is nothing obligatory for the landlord other then the need to obtain one. He believes that until further legislation or regulations are released landlords will not think much of them. In relation to question 6 Chaz said the benefits of the EPC’s may be felt if letting agencies had to abide by stricter regulations ‘i.e. to market and rent the property out, an EPC is essential then maybe yes, the benefits may be felt’.

4.11 – Time Limit

The purpose of this was to ascertain whether the time limit imposed by legislation for the renewal of EPC’s was sufficient. Furthermore the author wanted to know the interviewees views on the current time limit.

Kalil, from Adams Estates admits that as EPC’s are valid for 10 years it helps the landlords as they do not have to carry out the inspections and obtain new certificates on a regular basis. However Chaz Shukla has a different opinion and believes this is a limitation. He argues that the time span of 10 years is far too long and that energy performance assessments should be carried out on an annual basis. Consequently people will be able to see the improvement or lack of improvement in energy efficiency.

The two different viewpoints indicate that both letting agency landlords have there own perspective on the time span of EPC’s. Kalil’s response is based more on making it easier for the landlords without complications wheras Chaz’s response is more directly influenced on energy efficiency.

4.12 - Energy Ratings

One of the key issues the author believed would help him achieve his objectives was with gaining the viewpoints of property professionals with energy efficiency and energy ratings.

The landlords were all asked:

How would you feel if tenant’s decision on choosing where to live was based on energy ratings? Would this then make you think about improving the energy efficiency of your property?

Kalil indicated that it would be a good incentive for landlords to improve the energy efficiency. However he also reiterated that there would need to be greater improvements of tenant’s awareness for this to happen.

Chaz partly believed with this view and indicated it would be a good enticement for letting agencies to tell landlords ‘people aren’t choosing your properties due to your poor energy efficiency so you’ll have to improve them.’ However in reality he indicated that this probably would not be the scenario as market forces such as location and cost dictate renting factors.

Satinder’s response to the question was more directly focused on the best interest of the landlord. She suggested there is a need to improve energy efficiency of properties or tenants would go elsewhere and the landlord could subsequently lose money. The author believed the response by Satinder suggested energy efficiency could make for a more competitive renting market with landlords trying to compete with one another to have a more energy efficient property to attract tenants. This could result in the more energy efficient properties either being rented more easily or commanding higher rents.

The DEA had a different view on the improvement of energy efficiency in properties. She indicated that the recommendations in her EPC were spilt into different categories. (i.e. affordable ones, not so affordable) and suggested that not many landlords would invest in new energy saving compliances (e.g condensing boiler) to increase there rating by several points. However the author suggests that based on Satinder’s view landlords may have to do this to become more competitive.

4.13 - Future

The purpose of this theme was for the author to understand the interviewees views on the future of EPC’s and a wider application of EPC’s across all properties.

Kalil and Chaz both believe that the current rules and regulations on EPC’s will get more policed and stricter in the future. Furthermore they were both of the opinion that EPC’s would be implemented to all residential property in the UK not just rented property. However Chaz pointed out that this could create a substantial problem. Whilst the landlords maybe able to afford to carry out some of the recommendations of the EPC report many ordinary homeowners will not be able to financially afford to implement them. He suggested this could impose an additional burden on the government as certain people may only be able to carry out recommendations with grants.

Domestic Energy Assessor, Karen Bartlett believes that currently EPC’s are not being taken seriously enough and ‘nothing is being done about any of the recommendations listed in the report.’ Furthermore she believes data will be gathered on government databases with further legislation being implemented. ‘These things are in place to stop carbon emissions but only if they are forced then only then will people do something about them.’

The aim of this chapter is to summarise the study’s findings and to provide recommendations for future research that should be undertaken to track the progress of EPC’s and the rented property market. .

The purpose of the research was to investigate and consider the awareness of the public on the energy performance certificates and the reaction of the rented property market surrounding the implementation of the legislation.

The four following objectives were formulated to focus the research achieve the aims of the study:

1. To determine the extent of landlords and tenants awareness of the recent introduction of EPC’S.

In order to ascertain the tenant’s awareness of the EPC’S, questionnaires were provided to all tenants in a pre-determined sample in the Reading area. The results of the questionnaire highlighted that 63% of tenants were unaware of the newly implemented legislation. Furthermore the results of the questionnaires indicated that tenants who were aware of EPC’s had limited knowledge on the topic.

Interviews were conducted with landlords not only to determine the extent of their knowledge on EPC’s but also to obtain their personal opinions on a number of fundamental issues surrounding EPC’s. However as EPC’s had become mandatory in October 2008 it was now necessary for all landlords to obtain certificates for their property. Therefore the landlords interviewed all had good sound knowledge of the topic. All the interviewees however believed there was a certain lack of awareness with tenants and this unawareness was confirmed with the responses to the questionnaires.

To determine the personal opinions of landlords and tenants on the implications of the EPC’s.

From the questionnaires it was clear that tenants had a poor understanding of EPC’s however their knowledge of energy efficiency in properties was better. A majority of the tenant respondents (65%) viewed that energy efficiency was ‘reasonably’ to highly ‘important’ when choosing accommodation to rent. Furthermore 56% of the respondents believed that landlords should be forced to improve the energy efficiency of properties.

These results indicate that the tenants do take energy efficiency seriously and if were made fully aware of EPC’s then they may have a greater understanding of its implications.

The Spearmans Rank statistical test was used to identify any correlation between the respondent’s awareness of EPC’s and whether they believe landlords should be forced to improve the energy efficiency of rented properties.

A positive correlation coefficient of 0.232 which was statistically significant at p=0.091 indicating that there was an association between the two variables. This indicated that the tenants who were aware of EPC’s also believed that landlords should be forced in to improving the energy efficiency of rented properties. The findings suggest that tenants who are aware of EPC’s have more concerns on energy efficiency. For this reason the author believes that making people aware of EPC’s would be a benefit.

From the interviews conducted with the landlord and Domestic energy assessor a number of fundamental issues had arisen with there views of EPC’s.

Several of the interviewees believed that the introduction of the EPC was a ‘shambles’ largely due to its implementation with the home information pack which had been strongly criticised at the time.
The letting agency landlords and the Domestic Energy Assessor believed that an important issue was with the lack of ‘policing’ of the EPC’s. They all believed that because there was no strict regulations in place to make landlords carry out the recommendations many landlords would not do anything about it. This viewpoint was supported by the research undertaken previously in the literature review.
Energy efficiency was another key issue with the landlords. The interviewees universally agreed that if tenants decision on where to live was based upon energy efficiency then they would all certainly improve the efficiency of their homes.
On the future of EPC’s many landlords believed that current regulations and legislation on rented property would become stricter in the future and the costs of compliance will inevitable increase.
The study further illustrated that there were conflicting views with the time limit of EPC’s. Whilst the 10 year period was considered adequate by one landlord another believed it should be carried out annually.
All the interviewees failed to appreciate the real purpose of the EPC’s in the ultimate reduction of carbon emissions. It appears that they have become overwhelmed with its mere implementation.

To analyse the reasons that had lead to the implementation of the EPC.

The undertaking of the literature review focused on the reasons for the implementation of the energy performance certificates. The serious implications of Climate Change on the planet and greenhouse gases were well documented and discussed. Further analysed was the measures that had been in place to reduce carbon dioxide emissions. These included the various protocols and conventions that had been conducted including the Kyoto protocol and the

European Climate Change Programme (ECCP). As previously discussed it was these measures that had lead to the European Energy Performance of Buildings Directive (EPBD) and in turn the introduction of EPC’s.

4. To evaluate common criticisms associated with the implementation of the EPC legislation.

The literature review and the responses from the interviewees identified criticisms with the implementation of the EPC. The criticisms identified were strongly based on a lack of awareness of both landlords and tenants.

Another important criticism that arose from the literature review was with the conflicting interests between both landlords and tenants and the friction that this could cause between their relationship.

Limitations of the Research

The primary research undertaken could have been distributed to a higher number of tenants. This would have made the results more reliable and accurate. Furthermore the author could have used a larger area to distribute questionnaires, not just in the area of Reading.
This research was with the pre-determined sample as the tenants were sampled from the properties belonging to the author’s family. The choice of this sampling was because of the high response rate envisaged. However a random sampling technique may have been a better choice
The research undertaken was largely subjective rather then objective. This meant that the questions were based upon the tenant’s opinions which are more difficult to analyse.
The number of interviews conducted was limited due to the lack of the availability of landlords and Domestic energy assessors (DEA). Additional interviews may have been useful to make the findings more accurate. If more interviews were conducted there may have been further analysis using a chi-square statistical technique. This technique may have been used to test differences between the interviewee’s responses.
No covering letter was distributed with the questionnaire for reasons already mentioned in the research design chapter. However an additional covering letter could have been attached in case any of the respondents were unclear and ambiguous with the purpose or content of the questionnaire.

To ensure the ease of use and high return rate only simple, straight forward questions were asked in the questionnaire. However this had the limitation of not being able to explore the tenant’s opinions in further detail.
As EPC’s have only recently been implemented across rented property market (i.e. October 2008) there was very limited literature in books on the topic. Therefore the literature review had to focus on journals and internet references.

Recommendations for further research

The study should be repeated in several years time when landlords and tenants become more aware of the implication of EPC’s. The results from this study could then be compared to the study in the future. Therefore landlord and tenants views could be compared and contrasted. Furthermore to assess how the objectives of the EPC’s are being achieved.
Further research could be undertaken on a national level as this would enable a more accurate and reliable study rather then focusing on a particular area.
Further research could also be undertaken with not only the rented property market but with all other buildings that have EPC’s.
Interviews could be conducted with a wider range of professional bodies dealing with rental properties e.g. Mortgage lenders, solicitors, surveyors and local authorities.
Focus groups may be introduced in future research to determine views of additional domestic energy assessors. This is a form of qualitative research in which a selected group are asked about there attitude/opinions and has the benefit of exploring topics in more detail among the various participants. (Groupsplus, 1998)

With the increasing threat of climate change and its severe implications

the introduction of EPC’s is a positive step in the right direction. However

for the EPC’s to be effective a far greater awareness and understanding of it’s implications are necessary. In addition a framework needs to be established for the implementation of its recommendations so that the benefits so far as properties can be achieved.

Appendices

Appendix 1: Questionnaire – Tenant Survey

Appendix 2: Interview (Kalil Iqbal)

Appendix 3: Interview (Chaz Shukla)

Appendix 4: Interview (Satinder Kaur)

Appendix 5: Interview (Karen Bartlett)

Appendix 6: Identifying themes from Interview Transcripts

Appendix 7: Sample Energy Performance Certificate

Appendix 1: Questionnaire – Tenant survey

Energy Performance Certificate Questionnaire

The purpose of this questionnaire is to get the opinions of existing tenants on the recently newly implemented energy performance certificates on rented accommodation.

Your contribution will be valuable in my research and I would be grateful if you could complete the questions below.

1) How long have you been a tenant in this property? ỻ0 - 6 Months ỻ6 - 12 Months

ỻ12 + Months

What is your occupation? ỻ Student

ỻ Professional

ỻ Other

Please specify if other:

.......................................................................................................................................

What factors influence your choice of rented property?

(You may tick more then one box)

ỻ Location

ỻ Cost

ỻ Transport

ỻ Quality

ỻ Facilities

ỻ Connectivity

ỻ Other

Please specify if other:

.......................................................................................................................................

Are you aware of Energy Performance Certificates? ỻ Yes

ỻ No

(If you answered no to this question then do not answer question 5)

Which statement best describes how much you know about Energy Performance Certificates?

ỻ Good Sound Knowledge

ỻ Some knowledge

ỻ Little knowledge

ỻ No knowledge

How important do you consider energy efficiency when choosing which property to rent?

Please circle 1 2 3 4 5

Would you be willing to pay higher rent costs if you could save money on your fuel bills?

ỻ Yes

ỻ No

Should landlords be forced to improve the energy efficiency of rented homes?

ỻ Yes

ỻ No

ỻ Don’t know

Please be aware that the information provided will be kept strictly confidential.

Thank you for taking your time to complete this questionnaire.

Appendix 2: Semi-Structured Interview

Interviewee name: Kalil Iqbal

Company: Adams Estates

Job title: Branch Manager

How long have you been a landlord for?

We’ve been established for about 7 years now. I’ve personally been a landlord for a little bit longer.

Are you aware of Energy Performance Certificates (EPC’s), If so could you describe to me what you think they are?

Yes certainly EPC’s are an assessment of a property to determine how efficient the services are and give it a rating allows tenants and landlords to determine if the property is energy efficient to keep bills down.

Many properties do not have items such as double glazing windows, so a lot of heat can escape through the windows. This is just one example I suppose. EPC’s are a long term solution to reduce this.

Have EPC’s been undertaken in your properties?

Yes all properties have been done. We have a domestic energy assessor here who does all of out EPC’s.

What is your personal view on the implementation of Energy performance certificates across all residential property in the UK?

My personal view is there not worth there paper there written on to be honest. They do not determine if the property is going to get let on or not, doesn’t determine any rentable value in terms of property. They have really not made much of an impact. Up until now it’s been a bit of a shambles in some respects, know one was really sure what was going to be made of them and they have been rolled out in stages. Implementation dates have changed.

I can imagine that EPC’s will be rolled across all properties across the UK including mine and yours. The government will probably put a grant in place for it. In that way every house will be assessed not just rental properties.

Where as it’s only valid for 10 years probably helps so don’t have to get it done too often and it’s not too much of a blow.

(What do you mean by a blow?)

Well they are just a cost implication, but paying for certificates every 10 years makes it better then paying for them every year for example.

To be honest I think it’s just a formality more then anything for us. Get the EPC’s done there’s no follow up it’s just something that you just tick off.

Do you believe you will feel the benefits of the EPC’s and the recommendations listed in the report and if so could your explain why?

They are a benefit in some respects because obviously they highlight certain issues the landlord could address and that would obviously ensure his properties are a cut above the rest of his competitors as such. I think it is good in some respects as it can highlight certain issues and gives the landlord something to think about. If they do or don’t do it is a different thing but highlighting it is good.

Do you think the benefits of the EPC’s out way the cost implication of carrying out the inspection on your properties?

Not really know, however if it was done on a recommendation plus a deadline to complete to actually complete the works then I would say yes the benefits may out way the costs.

Like HMO license, council said you’ve got 3 years to implement this, that and the other. EPC’s require time limits so landlords will feel obliged to carry out certain recommendations.

These certificates being valid for the next 10 years within these 10 years if you’ve actually seen some changes. There not really set up so they can be followed up so I don’t feel changes can be implemented. No such governing body that’s overlooking whether any of the recommendations get carried out.

Would your view to the last question change if you could charge higher rents to your tenants due to savings on there fuel bills?

Possibly, it all depends on what is going on around us. In the current market there is not much being sold, there is a surplus of properties. So this obviously has a lot of impact on demand so maybe.

How would you feel if tenant’s decision on choosing where to live was based on energy ratings? Would this then make you think about improving the energy efficiency of your properties?

Yes it would definitely. All depends on the advertising. If there was a big TV commercial on EPC’s and making tenants aware that they need to look at there EPC rating before they look at there house as such.

If tenants see the EPC before they go on the viewing they know what there in for as such. However that’s not happening yet.

(On that point the government have spent a considerable amount on addressing tenant’s awareness of EPC’s.)

Really? Well that is a surprise I think it will take sort of 10 years to properly implement EPC’S across the rented market.

I think its similar tenant deposit schemes for example; they were introduced 2 years ago and now everyone knows about them. You know the first question a tenant will ask is what will happen to my deposit. There made aware, the universities make them aware, there’s lots of literature out there. However at the time tenants were completely unaware of the implications of the scheme.

Appendix 3: Semi –Structured Interview

Interviewee name: Chaz Shukla

Company: Westgate Lettings

Job title: Branch Manager

1. How long have you been a landlord for?

Five and a half years.

2. Are you aware of Energy Performance Certificates (EPC’s), If so could you describe to me what you think they are?

Yes I am aware of the certificates

They show the level of efficiency of a property taking into account the heat losses and emissions escaping from a home.

3. Have EPC’s been undertaken in your properties?

Yes too all the properties.

4. What is your personal view on the implementation of Energy performance certificates across all residential property in the UK?

I think it’s a good idea. I just think to police it’s going to be very difficult. More importantly I think the time span you can get it for 10 years, is just far too long.

It really needs to be on an annual basis.

(Why do you believe this?)

So people can see the improvement or lack of improvement over the year.

Also I don’t think people really care about the EPC’s. They will just think for example ‘I saw one of these on my washing machine.’

5. Do you believe you will feel the benefits of the EPC’s and the recommendations listed in the report?

No as I don’t think ill do anything about them as there is no one policing it.

(Could you please explain further?)

There seems to be no real reason to do anything. Doesn’t even seem to affect the tenants as most tenants do not even ask about it.

There is no pass or fail in EPC’s its just a value in a rating table. There is nothing obligatory so until further regulations come into effect landlords not going to think too much of them.

6. Do you think the benefits of the EPC’s out way the cost implication of carrying out the inspection on your properties?

I think on an individual basis it will be a good indication for each landlord to see where the property fits in the chart.

However on a larger level I feel that the administration that goes with that so huge that I do not think anybody will see whether people are actually adhering to the regulations or doing anything about the properties.

So in reality unless you police it strongly I don’t think landlords will feel the benefits.

(How do you think that it should be policed?)

I think that it should be policed through the letting agents, as there the one renting properties now.

If the agencies have to stick to the regulation i.e to market the property and rent it out you have to have an EPC then maybe yes the benefits may be felt.

It needs to be policed locally and centrally first for it to happen.

7. Would your view to the last question change if you could charge higher rents to your tenants due to savings on there fuel bills?

Making the changes is obviously a benefit to the property and that benefit is designed primarily for the tenants as they pay all the bills.

Now whether you could convince the tenants that the improvements are going to have an upside on there bills, and inturn charge more I don’t think that will be possible because a lot of people aren’t even sure about what EPC’s are and the effects.

8. How would you feel if tenant’s decision on choosing where to live was based on energy ratings? Would this then make you think about improving the energy efficiency of your properties?

If it was based on a positive EPC that would be good because it would give us reason to go back to the landlord and say ‘people aren’t choosing your property due to your poor energy efficiency so you should improve them’

However this will only come about if you educate the tenant in the first place. In this country the majority of tenants tend to me ethnic communities and whether they know the rules and regulations is questionable. Whether there educated enough or whether they care enough is another issue.

In reality I don’t think there will be the case because market forces indicate rents i.e. location, cost, appearance and other factors have a higher criteria.

Like when the student deposit scheme came out in April 2007 no students were actually aware of it atall due to the lack of awareness provided.

I don’t think any landlord wants an EPC to be put into place apart the fact that its created some jobs which is a good thing. These EPC’s were £130- 150 and now there down to £50 in a competitive market.

It is limitation to the landlord as its just an additional cost to him. Has no implication on its rentable ability as most people still look at the fundamentals when choosing accommodation.

However if an EPC was put into place with strong recommendations that this property should not be rented out unless the following was carried out then letting agencies would have to say ‘yes I love your property but unfortunately if you don’t do the following to it I can’t rent it out.’ But then you have to trust all the agents to do that.

The problem is going to come with educating the tenants. A message needs to be put out that if you’re looking at a property you need to see the EPC.

The aim is not to benefit tenants or landlords in the short –term but to reduce carbon emissions.

There are still plenty of issues technically with the EPC assessment. You have to identify the materials made up within the property i.e. insulation. In less u drill through walls to see insulation etc assessors will just be assuming so not very accurate. Everything is plastered now don’t know thickness of insulation etc.

(Do you think it will change in the future?)

I think it may get stricter in the future but it may also be a requirement to all residential property not just rental property. Then further problems would start to arise where people will not be able to improve the efficiency of there homes because they can’t afford to. This will then mean that government grants will need to be taken out etc.

Landlord needs to be educated and then tend to get educated when further rules and regulations come into effect.

Appendix 4: Semi –Structured Interview

Interviewee name: Satinder Kaur

Company: -

Job title: Private landlord

1. How long have you been a landlord for?

Approximately 15 years

2. Are you aware of Energy Performance Certificates (EPC’s), If so could you describe to me what you think they are?

Yes I believe the Rates the energy levels per house.

(Could you explain further?)

I think that they rate the energy efficiency of homes taking into account the heat loss and condition of the services.

3. Have EPC’s been undertaken in your properties?

Yes all of them.

4. What is your personal view on the implementation of Energy performance certificates across all rented property in the UK?

I think they are a complete waste of time because what is the point of introducing something that wont be followed through by government policies rules and regulations etc. I don’t think it is governed properly at all and to be honest I just get them done because I have too.

5. Do you believe you will feel the benefits of the EPC’s and the recommendations listed in the report?

I would feel the benefits if the rents will include the bills. As obviously my bills would be higher and rents would have to go up accordingly.

If I could actually save fuel bills in the end then yes I guess so. However I haven’t implemented any of the recommendations in any of my properties.

6. Do you think the benefits of the EPC’s out way the cost implication of carrying out the inspection on your properties?

No I don’t because the majority of the tenants are not aware of what an EPC is therefore it is just an extra cost for the landlord.

(Ok how about in the future if the awareness of tenants improved?)

If they were made more aware of them I still don’t think there would be of any significant benefits. I think that the cost to implement the recommendations would never be paid back through saving on fuel bills.

7. Would your view to the last question change if you could charge higher rents to your tenants due to savings on there fuel bills?

No because I don’t believe tenants would pay the money because there is a certain sealing limit on charging rents in each area and I don’t feel fuel bills would enter into the equation.

8. How would you feel if tenant’s decision on choosing where to live was based on energy ratings? Would this then make you think about improving the energy efficiency of your properties?

Well I might have no choice then as we are all in it to make money and if a tenant goes elsewhere we will lose money to our competitors. However I can’t see this being foreseeable in the future just because I don’t think tenant’s decision on choosing accommodation will ever be focuses on energy ratings.

Appendix 5: Interview Questions

Interviewee name: Karen Bartlett

Company: -

Job title: Domestic Energy Assessor

How long have you been an EPC assessor for?

I qualified in august 2007 and EPC’s were rolled out across the UK in September 2007.

What made you want to become an EPC assessor?

I wanted a change of job as I’d been working at a desk job for 18 years.

Nothing in particular made me want to become a DEA. I guess working for myself was a benefit to me. I can therefore manage my time easier.

In your personal view do you feel energy performance certificates will be a success, and if so please explain why?

I think it will take a long time for the general public to become aware of them.

It was definitely a shambles when it was first introduced as part of the Home Information Packs. The EPC’s or the HIP’s were not promoted well at all.

The public are becoming increasingly aware of as the rating chart as it is on cars etc. I have heard adverts associated with EPC’s on radio.

I think no it is definitely not a success at the moment. As landlords can just simply pick up an EPC and stick it in a draw and do nothing about any of the recommendations on it.

However it is my personal opinion that in a few years time this data will be gathered on the government’s database and they will start making people do something about it i.e implementing the recommendations. These things are in place to stop carbon emissions but if only they are forced then only then will people do something about them.

Until were forced to do something on the recommendations I don’t think many people will. I don’t think currently EPC’s are heading in the right direction so I feel that people will be forced.

Have there been any trends with the properties you have assessed in terms of energy efficiency?

The only trend I can think if is that the older the property the worse the energy efficiency. It is not unusual for me to get a rating I didn’t expect.

(Is there a particular type of property that is worse for energy efficiency?)

Bungalows come off badly. However this is not anymore surprising then what I was expecting.

How far do you agree with the statement that many landlords make by suggesting that EPC’s are just an cost implication?

I would probably agree with that statement at the moment. I know there’s many rented properties still out there with people not knowing what to do. I feel as though it needs to be policed properly for landlords to feel any benefits.

Landlords will literally give you the instruction to carry out an EPC just before the tenant is moving in. It is quite low in there priority list/

I think that Regulation should be implemented that an EPC should be viewed by the tenant before a viewing for a property is undertaken.

(Have you come across any instances where you feel that EPC’s could be benefiting the landlords?)

A few landlords that I have come across have highlighted to me they do not have any storage heaters in there properties due to the poor energy efficiency.

I have also come across a few people that have said I’m not going to rent anywhere where there is a storage heater but this was only recently.

How frequently do the improvements you recommend in your report to the landlord get carried out?

I have no idea whether anyone carries them out at all.

The Trouble with recommendations is that they are split into different categories; affordable ones and not so affordable etc if you’ve got a rating of say 58 and you have 5 recommendations included in your report. Say one of the recommendations was to change the boiler to get to 60. Who will do it? Not many people.

Who will put a condensing boiler in just for the sake of it as it is extremely expensive. Incidentally a plumber told me that a condensing boiler can self corrode and may only last between 6 - 10 years while older less efficient ones last longer.

Do you think that tenants should have an extra cost implication for more energy efficient properties?

I think its Difficult to be relative on as different tenants will use there services differently as one group of tenants may use the heating more then the others so they won’t be saving on there fuel bills.

It has also got to depend on the volume of rental property available, and the criteria for tenant’s i.e close proximity to the university. Energy efficiency may be one of the criteria in the distant future.

Appendix 6: Identifying Themes from Interview Transcripts

The table below shows the interviewees and the common themes that were identified from their interview transcripts.