Welsh private rented sector needs to plug 98% funding gap to reach net zero by 2050

Insight & comment28.07.225:15 PM by Stephen Delahunty

The Welsh government is being called on to develop a long-term strategy for meeting 2050 net-zero targets, after new research revealed a huge funding gap in the private rented sector (PRS).

Picture: Alamy

The research by Tyfu Tai Cymru, part of the Chartered Institute for Housing (CIH) Cymru, revealed an 89% funding shortfall to reach energy performance certificate (EPC) band C in the Welsh PRS, which rises to 98% when measured against 2050 net-zero targets.

The report was authored by the Severn Wye Energy Agency, Sero and Dr Donal Brown, a research fellow at the University of Sussex and sustainability director at the Sustainable Design Collective.

It looked at the technical and behavioural solutions needed to meet the targets for decarbonisation and reduce fuel poverty for tenants in the PRS in Wales.

The report assumes that the current Warm Homes Programme will continue throughout the next decade, and concludes that most funding will need to come from landlords and other forms of private financing.

In Wales, PRS housing represents 16% of the stock and is the worst-performing tenure in terms of energy efficiency.

Fuel poverty in Wales is defined as a household that spends more than 10% of its income to maintain satisfactory levels of heating.

In 2020, it was estimated that 20% of the PRS live in fuel poverty in Wales, in comparison to 11% of owner-occupiers and 9% of social housing tenants.

The report developed decarbonisation scenarios for four main PRS house types: a two-bed flat, three-bed terraced house, three-bed semi-detached house and four-bed detached house.

This showed a large variance in the cost and benefits of meeting these targets, suggesting the fixed cost of compliance thresholds would be problematic, and new forms of financing are needed.

The report also examines four areas essential to delivering the retrofit agenda in the Welsh PRS: tenant and landlord engagement; installer and supply chain coordination; funding and finance; and regulation and enforcement, before proposing solutions to overcome these challenges.

The report makes a number of recommendations, including the development of a long-term strategy for energy efficiency, fuel poverty and decarbonisation of the PRS that integrates with broader objectives around housing quality, fire safety and landlord licensing.

It also calls for increased grant funding, new regulations and standards to drive the uptake of energy efficiency in the PRS, and a massive retrofit skills drive that will require public investment in new apprenticeships and a Welsh supply chain for low-carbon technologies.

“The private rented sector is probably the most challenging area for Wales’s decarbonisation agenda,” Dr Brown says. “This report provides an essential exploration of challenges, and proposes a series of concrete recommendations for how they can be overcome.”