[15.09.22] Local Stakeholders’ First Take on How to Tackle Energy Poverty in Rental Situations

A first look on policy recommendations discussed at our latest Policy Forum

In the recent two years ENPOR partners scanned the current policy and action landscape in Europe and developed and implemented a consequent and carefully targeted stakeholder consultation process to develop policy recommendations on short-term, mid-term and long-term actions to mitigate energy poverty on the private rented sector. The following details result from our policy research and also stem directly from local and national stakeholders in Austria, Greece, The Netherlands, Germany, Estonia, Croatia and Italy.

The overall findings underline that current policies and measures need to be adjusted to efficiently eliminate energy poverty in the private rented sector (PRS). Very few policies consider the tenant-landlord dilemma, or even brought together tenants and landlords to discuss and address both of these groups’ needs. Difficulties with access to funding and information remain an urgent issue for both tenants and landlords especially in the current energy crisis.

Energy efficiency measures are the most important long-term measures to alleviate energy poverty and to improve living conditions in the PRS, however they are increasingly more expensive and need longer times due to lack of material and skilled workforce.

Future efforts aimed at identifying any PRS-directed elements within relevant policy interventions and programs will need to be based on involving a wide range of stakeholders, comprehensive data collection, and evaluation of measures and encompass countries with a less established tradition of assisting private sector tenants and landlords. The following key statement summary to date the most relevant formulations of all stakeholders involved:

Financial barriers are the most critical ones, a finding that was agreed across all stakeholder groups, except by policymakers.

The European PRS is understudied and relatively invisible, particularly among its lower-income and more vulnerable tenants and landlords.

EU-level strategies can play a significant role in the promotion of energy efficiency policies targeted on the PRS.

Adjusting financial constraints alone may not be sufficient to ensure an improved energy performance, and to alleviate energy poverty.

Barriers and respective solutions cannot be viewed in isolation as they cover financial, social, political/regulatory, and technical issues. Thus, we summarize ENPOR Stakeholder groups (Regional Action – REACT Groups) key suggestions following the ENPOR Co-design process for the adaptation of ENPOR policies taking into account a holistic and multidimensional nature of the issue:

Implement a well-balanced mix of policies and measures with the active participation of landlords and tenants.
Foresee the co-financing of the required energy efficiency interventions by landlords and tenants.
Design the policies sharing the triggered benefits equivalently between landlords and tenants.
Take into consideration the actual needs, priorities and expectations of both landlords and tenants.
Organize targeted information and awareness-raising measures.
Provide clear and comprehensible information through specialized experts.
Initiate an open consultation procedure with the active participation of landlords and tenants for creating trust.
Foster the participation of the municipalities.
Apply simplified and standardized procedures for the participation of energy poor households into the planned policies.
Study the behavioral problems, which are triggered by the phenomenon of energy poverty.
Examine carefully the application of regulatory measures so as not distort the market and lead to renoviction.
Integrate the additional multiple benefits into the analysis.

Examples of multidimensional solutions suggested by stakeholders (survey citations):

Barriers	Solutions suggested by stakeholders
EU level Financial/Political/Regulatory	“oblige landlords to renovate, to support the EU’s efforts to reach the 2050 goals, taking into account that tenants do not have to bear all costs.” (Policy organization)
National level Financial/Political/Regulatory/Social	“offer tax reduction on the renting revenues if landlords commit to renting their dwellings with a rent lower than the market, along with the requirement that their dwellings meet a minimum energy performance level. Additional tax reductions could be granted if the dwelling is rented in vulnerable groups.” (Research institution)
National level Financial/ Political/Regulatory	“when national governments design energy efficiency financing tools, a detailed mapping of the residency models should be foreseen to support a better allocation of funds based on the real and proven needs of each residency model.” (NGO)
Local level Financial/Political/Regulatory/Social	“local governments can assess opportunities and potential negative impacts at project-level and promote tailored financing solutions (e.g., to avoid so-called renovictions, etc.), especially when it comes to vulnerable households.” (City Network)

Major barriers and solutions identified by ENPOR research and Regional Action Groups to successful uptake of energy efficiency policies

Financial barriers and suggested solutions

Barriers

Split incentives: lack of direct financial incentives targeting the rental situation, rising high upfront costs (assessment, installation, replacement, financing costs, etc.) due to material price rise and lack of skilled workforce (combined impact of COVID-19, war and energy price rise);

Increased rent

Return on investment

Energy efficiency does not increase the property value

Solutions

Support packages for landlords: Grants Subsidies Property tax reduction Income tax reduction

Stakeholder responses / suggestions

Social barriers and suggested solutions

Barriers

Broader social vulnerability in the sector (e.g., unemployment, single parents, ethnic minorities, etc.);

Tenants’ and landlords’ mistrust in governmental policies;

Stigmatisation and time-consuming, complex processes;

Small scale, low-income landlords.

Solutions

Improved outreach- expansion of advice services/ specific consulting services.

Education on energy efficiency measures

Increased and systematic participation in landlords’/ tenants’ associations.

Stakeholder responses / suggestions

Political barriers and solutions

Barriers

Political invisibility of the most vulnerable tenants, esp. in the PRS

Low level of awareness of EU-based policies that address energy efficiency in the PRS even from relevant stakeholders.

Only few policies address the specificities of the PRS, or they are sufficiently targeted to the lower-income, vulnerable segment.

Political invisibility/ lack of data on energy poverty amongst tenants in the PRS.

Lack of energy labelling and mandatory efficiency schemes.

Solutions

Creation and operation of observatories at the national and/ or the EU level (e.g., EPOV/EPAH). Making energy poverty in the private rented sector visible: Energy Poverty Dashboard

Support of the dialogue between involved parties, design, and implementation of legal frameworks and specific conditions.

Energy performance assessment of buildings through Energy Performance Certificates & Mandatory Minimum Energy Performance Standards.

Technical barriers

Barriers

Lack of information

Lack of technological knowledge to implement adequate solutions

Energy usage behaviour/ rebound effect

Measuring energy poverty in the private rented sector for better targeted national policies

Adequate policy design should be responsive to the unique challenges of the PRS, and be well targeted to the needs of tenants, whilst balancing the financial capacity and willingness of landlords to renovate. To be able to design effective policies and measures targeted on the private rental sector, it is necessary to be able to measure energy poverty in this sector. Currently there are four different approaches for measuring energy poverty levels focusing on :

self-reported assessments of indoor housing conditions, and the ability to access and afford basic energy services,

household energy expenditure, often compared to income,

direct measurement of the level of energy services (electricity, heating) achieved in the home compared to standard levels,

consequences of energy poverty, (= disconnections, arrears on utility bills, health issues or cold-related mortality, etc.).

On a European level, energy poverty measurement is depending on comparable data of member states. Since no European database exists collecting information at the household level to build an indicator of the different energy poverty dimensions, the European Commission use a set of consensual and expenditure-based indicators from different databases including the most comprehensive ones: the annual EU Survey on Income and Living Conditions (EU SILC) and the Household Budget Survey (HBS).

ENPOR developed further range of indicators to better capture the situation of the private rented sector, presented via the Energy Poverty Dashboard called
REPI = Composite Energy Poverty Indicator for the PRS:

REPI = (a+b +(c/2))/3 * d

Where:

a = the share of people unable to keep the home adequately warm in the PRS.

b = the share of people reporting utility bill arears in the PRS.

c = the share of people reporting housing faults (damp, mould, rot in window frames or doors) in the PRS.

d = the share of people living in the PRS.

Other indicators:

Poverty risk (ESTAT indicator ilc_peps01) the share of a population that is at risk of poverty or social exclusion, defined as having a household income that is below 60% of the median household income in a country/region;
Relative Risk of Asthma: the share of a population with asthma due to dampness and mould in the building;
Size of rental sector: the share of people which privately rent (i.e., do not own their homes or live in social housing) in a given country/region;
Share of tenants in the energy poor population (soon available) .

The indicator is integrated to the Dashboard, a tool that works by juxtaposing the levels of energy poverty in the private rented sector with levels in the general population, taking account of different countries at different scales (from national to regional). This targeted data reveals trends and patterns about the issues the sector faces, shining a light on a previously neglected category.

To enable the design of effective and targeted policies it is important to calculate the share of tenants in the energy poor population within a country. This derived indicator can provide guidance for national policy makers and practitioners as to where to focus their efforts to alleviate energy poverty.

To further increase the data’s utility for monitoring progress and policy impacts in terms of energy poverty alleviation, further amendments to current pan-European data collection exercises are needed, such as including energy expenditure items in SILC questionnaires, adding additional energy poverty indicators related to summer heat stress and mobility from former ad-hoc modules to the regular collection and expand data collection on a subnational level in all countries. This would enable a more integrated assessment of the multiple dimensions of energy poverty across countries and regions.

Effective alleviation energy poverty in the private rented sector is only possible with upscaling energy efficient renovation of the worst performing buildings in the rental sector. To reach both the climate targets of each member state and protect the most vulnerable, member states should be required to design regulatory measures combined with appropriately tailored financing offers and incentives for landlords in combination with social compensation measures. The proposed revision of the Energy Performance of Buildings Directive (EPBD) has taken up this approach in the form of introducing Minimum Energy Performance Standards (MEPSs) for existing buildings flanked by financial support through the Social Climate Facility. How well this structure serves a just energy transition depends on the transposition into national law and the setup of accompanying measures by the member states.

Useful source of information on the state of the art of ENPOR Policies and engagement strategy: