Energy Performance Certificates

The following is to illustrate how law and politics and idiocy interact. It is very like Japanese Knotweed; you plant it thinking it may be useful and then find it grows through motorways and is impossible to eradicate.



Background

To the mild surprise of the public, the Coalition did something both parties had promised to do: abolish the Home Information Packs. An immediate attempt at weed-clearance. They did so within days of taking office and laid an order in which suspended most of the legislation, pending its repeal, for which they have to pass primary legislation.

Despite the prompt action, the Coalition was lumbered with retaining one element of the pack, the Energy Performance Certificate (EPC), because that draws its authority not from English statute law, but from a European directive:

DIRECTIVE 2002/91/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 December 2002 on the energy performance of buildings

The original UK legislation on HIPs and EPCs was contained in section 5 of the Housing Act 2004, every word of which section is a monument to folly and can only have been written by someone capable of colour-coding their elastic bands and bonged out of their skull on amphetamines.

There is a related 2007 statutory instrument and explanatory note for bringing in the EPCs which was amended in 2008 and then again in 2010.

The current legislation giving effect to the Energy Performance Certificate aspect of that Directive in English law is contained in the:

Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 (as amended by the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010).

(As usual, where appropriate, separate orders exist for N. Ireland and Scotland. It is only necessary to look at the English law to illustrate the problem).

Current situation

To try to take the sting out of the retention of EPCs, it is possible to start marketing a house without one, but a certificate is supposed to have been commissioned and there is a £200 fine for failing to provide one by 28 days later, conditional on whether the person has made reasonable efforts to supply one and if the Trading Standards Officers bring a prosecution. However, that supposes the Trading Standards Officers haven't got anything better to do and somebody complains to them. See carefully worded questions and answers from the Communities and Local Government website.

The Energy Performance Certificate is a six page report which will cost you between £35 and £65, regardless of whether anybody ever buys the house. Indeed, it is a matter of supreme indifference to house buyers; they are worried about location and size. An EPC adds little or no value to the transaction.

The certificate has to be provided by an accredited supplier (as specified by Article 10 of the Directive), and they are finding they have to compete on line. One 3rd-party coordinator is offering them at £35, which makes no economic sense. It would mean an EPC assessor would have to be able to visit the property and fill out a report for under £25. That simply isn't possible; at that hourly rate you'd be better off as a mobile hairdresser, window cleaner or gardener. Besides, only a qualified surveyor would be able to undertake a meaningful assessment, and even they stud their reports with disclaimers such as "to the best of my knowledge". The information on an EPC is a fuzzy guideline which indicates something possibly true about the state of reality, assuming reality is what the householder said it was in the first place.

Dynamic

How we got here. There was public fury about the length of time it takes to complete property transactions under English law. That is partly because English property law (unlike Scots law) works by having the contract form at exchange, not earlier when people agree a price. This gives scope for people walking in to deals then trying to argue about money at the last moment and it drives people mad.

Then the EU Directive 2002/91/EC laid an obligation on governments to monitor and encourage energy efficiency in housing. It airily waved its fairy wand and decreed that all purchasers be given a certificate to allow them to compare energy efficiency of properties, which is no bad thing, but it isn't such a good thing that it really needs to be done. It did this in order to be seen to comply with the fine words of the Kyoto Protocol.

The Labour government seized on this and attempted to link the issues. All house sellers (except for some limited exceptions) would be required to do all the paperwork up front, including the EPC, and then it would all work more like selling a car at auction. The government would give effect to the Directive by obliging local authorities to keep registers of the EPCs which gradually allow them to build minutely detailed databases of housing in the area. There would be so much data that they had to remember to stick in a clause about it not be interrogated by any Tom, Dick or Harry - or at least, not without some proper authority which wasn't specified. The EU Directive could be complied with by hiding it inside something for which there appeared to be public demand. Hurrah, no nasty arguments from the Eurosceptics and a grateful public would carry the government aloft on their shoulders.

As we all know, HIPs didn't work. Rather than reduce friction in property transactions, they may have helped inflate the house price bubble by reducing the number of potential vendors and thus keeping the price of houses higher than it might otherwise have been. When Eric Pickles and Grant Schapps were charged with removing the structure, they were stuck with EPCs and had to do their best to neutralize them by reducing the penalties for failing to comply.

Remedy

The state of play is that if you fail to produce an EPC, and you reasonably should have done so, you might possibly wind up about £150 worse off than you would have been if you had complied in the first place, but only if somebody can be bothered to put the boot in. That is hardly worth challenging, except that there is something spiritually wrong with inviting people to ignore the law. There ought to be a way round this.

The original EU Directive only wants a certificate of comparison to be provided, and it doesn't define precisely what should be on it.

"The energy performance certificate for buildings shall include reference values such as current legal standards and benchmarks in order to make it possible for consumers to compare and assess the energy performance of the building. The certificate shall be accompanied by recommendations for the cost-effective improvement of the energy performance."

Not even the Housing Act 2004 defines it precisely. Instead, at 163 it says:

"(4) In this section “relevant information” means information about any matter connected with the property (or the sale of the property) that would be of interest to potential buyers.

(5) Without prejudice to the generality of subsection (4), the information which the Secretary of State may consider to be relevant information includes any information about—

(e) the energy efficiency of the property;

(7) The regulations may require a prescribed document—

(a) to be in such form as may be prescribed; and

(b) to be prepared by a person of a prescribed description on such terms (if any) as may be prescribed."

So the Secretary of State can say what the certificate should look like and who can prepare it. In the SI of 2007 this was gold-plated and had knobs put on it. The remedy consists of sawing the knobs off and chucking the remainder in the skip.

Now, it is always true that any property which requires an EPC (some are exempt) will be meet the definitions set out at the lowest level of efficiency, level G. So it doesn't need an assessor to say that a house complies with the minimum level. It might do better than that, but it will be logically and necessarily true that the minimum level has been reached.

The simplest thing do to then, is to authorize householders to be accredited persons for the purpose of self-certification at the minimum level, G, and to revise the definition of the certificates to contain only this data, along with a standard list of things one can do to improve energy efficiency.

Estate agents can hold blanks. In fact, they can do the job of running round and saying obvious things such as "you want low energy light bulbs, you do", and we can dispense with the people currently doing this non-job at the Council. Downloadable PDFs could be on the web. Just print one off and fill in your own address. Householders who want to pay to get their house in ratings A to F can still do so, if they think it is worth it. The ex-Council workers can re-train as EPC assessors, if they really won't take the hint about acquiring a useful skill. The local authorities can then pile the certificates in a box under the desk until such a time as we wish to shred them.

Another remedy is to withdraw from the EU and then it won't matter what Directive 2002/91/EC says.