A housing industry group wants the energy efficiency of a social rented property to be factored into the rent the tenant pays. 

The Housing Forum claims that social housing is currently the most energy efficient tenure of housing in England, with 60 per 

But it says the tenants in an EPC D-rated property face bills which may be twice as high as those in an EPC-B rated property, with few options to improve the energy efficiency of their own homes.

It says these higher energy costs could be factored in to rent levels so that the total cost of rent and bills is evened out for tenants within four years. This would reduce rents for tenants with higher energy bills, with those in more energy efficient properties paying “a bit more rent in recompense” for lower energy bills. 

The forum adds that factoring in energy efficiency into the social rent formula would also provide an incentive for social landlords to upgrade their properties, generating capacity for private finance to help fund some of the upgrades. 

The social housing rent formula was standardised in 2001 and is based on property size and location. 

Not all social housing rents are set according to the formula: some properties, particularly newly built units, can be let out at ‘affordable rent’, defined as up to 80% of market rent. 

However, social rent remains the dominant tenure within social housing, and maximum annual increases for social rents are set by central government and have in recent years tended to allow rents to be increased each year by one more percentage point than the Consumer Price Index – known as ‘CPI plus one’. 

But from 2016 to 2020 rents were instead cut by one percent a year. 

Jamie Ratcliffe – chief communities and sustainability officer at the Sovereign Network Group, a housing association within the forum – says: “The UK has the draughtiest homes in Western Europe. This combined with the highest energy costs exposes the country to authoritarian regimes and undermines our national security. Instead of effectively running the bath with the plug out urgent action to make homes warmer, healthier and easier to heat is needed. 

“At present the complicated formulas for social rents take no account of the cost to heat a home and they should. A “warm rent” would increase the funding options available to landlords and be fairer to tenants.” 

And Ian McDermott – chief executive of Housing Forum member, Peabody – comments: “I’ve been an advocate for “warm rents” for many years and welcome this policy paper from the Housing Forum. It’s a good exploration of the issues. At Peabody we support the principle of taking thermal comfort and energy efficiency into account in the future social rent formula. 

“This could incentivise energy efficiency work and retrofit investment, help reduce residents’ energy bills and support a fairer and more equitable approach to rent setting. We are concerned about additional complexity however, and any changes would need to enshrine affordability in rents and service charges whilst safeguarding landlords’ ability to invest for the long-term. We look forward to being part of the discussion going forward.”