Cynulliad Cenedlaethol Cymru

My partner is an adviser to Bute Energy. I don't know if it's relevant to this. 

I refer Members to my published declarations of interest regarding property ownership. 

Chair, I refer people to my declaration of interests as well. 

Thank you, Chairman. Do you consider that a long-term, national strategy for decarbonisation of housing in Wales across all tenures is actually essential to driving forward progress?

Yes, I would agree completely with that. I think a cross-departmental, public-private partnership is probably required. The scale of the challenge to decarbonise our homes and the route to net zero by 2050 is incredibly challenging, and each day that we don't have a coherent strategy, I think that challenge becomes even greater. I don't think any particular sector can achieve this alone; I think there has to be some leadership from the Government in terms of what it wants to achieve, and allowing businesses to plan to make sure that there is an industry to support the decarbonisation. I think also consumer education to understand the scale of the challenge, the benefit to them, particularly in the current climate of rising energy bills, is vital as well. But, we're looking across the UK, Wales included in that, at about 1 million homes per year, so it's a huge, huge challenge. So, for the Government to set out this long-term decarbonisation strategy I think is absolutely key to achieving our objective. 

Does anybody want to add anything? Cenydd.

I'd certainly echo that from a development bank perspective, and in particular, given our focus on small and medium-sized businesses traditionally, that need to give that clear road map to businesses that we're asking to invest and sometimes change business models to accommodate some of the things that we need from them. I think giving them the confidence that there is that guaranteed expenditure in this space is really important to bring them along on the journey. 

If I may, Janet, how much of that bringing together is actually happening, then? I mean, the Government tell us that they are on it very often, but what does that look like to you on the ground?

I think from an SME perspective, there's still a lot of ground to cover, and I do think it starts with the overarching strategy. I think, absolutely, a detailed plan is required, but the first step of that is the strategy. So, we know what the targets are: finish the development of the strategy, where there has been a lot of good work going in. I think it's about crystallising that now, and developing the plan off the back of that. And then being really clear in our communication around that, which we're not able to do at the minute, because the plan isn't there. But I think that is the next step.

Yes, okay. Matthew. 

I agree with the comments just made. I think we definitely do need a long-term housing strategy, and I'd emphasize 'long term' there. I think one of the issues we've had around housing more broadly is that it chops and changes too much, and it's quite difficult for home owners to understand exactly what they should be doing, and other stakeholders to understand that too. But I would add that it's important the Government leads it; I think their convening power, bringing together all the stakeholders to drive forward the end goal, is really important.

Okay. Diolch yn fawr. Janet.

A tiny supp before my next one: is there an argument, however, that, before a plan is written up, there needs to be a survey of the properties? Because we've got quite a diverse range of properties across Wales in terms of very old stone buildings, not well insulated at all. So, is there an argument that properties would need to be—? How do we know? We're not collecting data, are we, really, at the moment on what's needed where. How can you do a plan if you don't know what the problems are? Is there an argument there?

Let's bring Emma in here.

Thanks very much. It's a very good question, because you do need to have the information available for how you can decarbonise particular properties to help inform a plan. But I would say setting ambitious and yet achievable targets would actually drive many more outcomes more quickly than if you just did the analysis, which would probably take several years. It would take quite a while. What I wanted to add to the previous question is: by setting those long-term targets—and I'd mirror what Matthew said; it is 'long term'—that does give the finance sector the confidence to innovate into a space, because there will be demand driven off the back of that. I'd also suggest that any long-term targets, absolutely, are developed in collaboration with those who are technical specialists, who can help identify where decarbonisation needs to happen. But also, it should be developed with stakeholders from the finance sector, from the supply chain, et cetera, so that those people who are experts in those individual parts of the entire value chain can help feed in and help inform what that plan looks like.

My final question on this is whether the Welsh Government needs to adapt its approach to ambitions for decarbonising the private housing sector in light of the energy price and cost-of-living crisis. If they do, how?

It's the million-dollar question. You can't ignore the fact that the goalposts have moved considerably in recent weeks and months.

From my perspective, yes, the goalposts have moved, and what it's done is really focused people's minds. We survey consumers annually on their ambition for decarbonisation and retrofitting, improving the energy efficiency of their homes. Some data for Wales from October is that a year ago, it was six in 10 people who had not considered making energy efficiency improvements. Now, it's half of those people, so clearly more people are becoming concerned about this. The largest barrier to them was meeting that initial upfront cost—that's also perversely dropped in the face of a cost-of-living crisis. And then, not understanding how long it takes them to recover the cost if they invest in that. So, I think in terms of adaptation and the first point, one thing that we've seen in this arena so far has been very little consumer-led demand, and, actually, in the face of the cost-of-living crisis, that has really, really focused people's minds in terms of what they can do to reduce their energy bills. So, actually, there's probably a really good opportunity to help educate and signpost people to how they can go about achieving that. And then, as Emma says, once you start to create that demand and some certainty, coupled with that long-term strategy, finance will follow, installations will follow, trusted installers. And if you make that route map as light-touch as possible for consumers to engage with, I think that will really help.

I was just going to add some facts in as well, just to add to what Paul was talking about there. We also did some surveys at the Green Finance Institute to understand consumer attitudes towards energy efficiency and using traditional forms of finance for energy efficiency. By traditional forms we mean things like credit cards and mortgages. We tested last February, and then we retested the February just gone, so this was before the energy crisis really started to bite. Even then, the percentage of people who said that energy efficiency was important to them had increased from 80 per cent to just under 90 per cent. But, interestingly, as well as people being more interested in energy efficiency, they said that they were less comfortable using traditional forms of finance because they had concerns about being unable to afford repayments. The reason I flag this is twofold. One is that there's clearly a need for innovation, of new financial products that genuinely appeal to consumers and make them feel confident and happy to use them. But I think the other side is the really critical role that public finance can play here. Obviously for those in the most vulnerable situations, grant funding will always be the go-to solution, but there's opportunities as well to use slightly more innovative approaches of blending public and private finance, which, again, may help to alleviate consumer concerns about using finance, because they know that it has that Government stamp of approval and the added benefits that things like guarantee schemes can bring.

Does anyone have anything to add? No. We touched on data earlier, so I think, Jenny, you're going to take us in that direction now.

So, we don't know enough, but it's how are we going to go about it in terms of assessing the size of the problem. What role do the panel members see for whole-house assessments or building renovation passports to underline and make it clear what realistic targets are? And how do we get people to engage? People may just say, 'Go away. I'm not interested.'

From my perspective, the passports are a very efficient way and a very user-friendly way of communicating what is often quite a complex set of technical requirements for a home, and they definitely lend themselves longer term as a road map to net zero for people. So, I think they can be used very effectively.

I think, going back to a point that Paul raised, which I absolutely agree with, the opportunity to strike is really rife given the demand driven by fuel price increases. I very much would support the idea of starting with a product, part of which included the whole-house assessment, perhaps as part of a first intervention and one of a set that could be undertaken over, as Nesta had suggested, a 10-year period, where the finance for that is guaranteed—people know that they can access the finance, they can understand the technology. But, in starting, in taking the opportunity now, I believe you can start to tackle what is an enormous problem of how do you survey 1.4 million homes. We don't have the surveyors in place to do that, even if there was a magic switch we could flick instantly. But, starting somewhere, I think, is so important. There's a lot of research and a lot of good-quality time that's been invested into trying to understand the scope of the problem, but I think getting started is key.

Going back to—

Sorry, Jenny, I think Matthew wanted to come in. 

I was just going to say that I agree with that, but I think it needs to be part of a broader communications campaign. I think we need to have different layers of this so that, actually, if you are a home owner, you go and look for information, you get that information, you look to what you might be able to do for your individual property and then you get actual advice about what to do, specifically what to do to your property. So, I think it does need to be part of a broader campaign.

Emma as well before we come back to you, Jenny.

Thank you. I was just going to say that at the Green Finance Institute we worked with over 50 data specialists to develop a framework for what a building renovation passport should include as the golden standard for what it should do, who should deliver it, how it could be supported. My one comment is that I think building renovation passports have a really key role to play, but they're not scaled at the moment. They need help to make them a mainstream solution. I just really wanted to emphasise that additional investment and finding areas where they could be targeted and piloted, and being able to subsidise the costs for some of those pilots just whilst the teething problems are worked out of them, would be very valuable. The final bit I'd say is that they really do need to link into somebody like a retrofit co-ordinator who can hold the hand of the consumer through their retrofit journey. So, I think you can provide the information, but you do also to a degree need that personal touch to help consumers through the end-to-end journey.

How are we going to achieve that consistency, so that the property surveyed in Wrexham is to the same standard as in Cardiff? Do you want to start off on that, Emma? Because, otherwise, it doesn't have any value, really, does it, other than whether you trust the individual surveyor?

So, from the group we were working with, because this building renovation data specialist piece—. I'm a banker by trade. But, having worked with the data specialists, there was a clear need for consistent upskilling for some kind of standard for building renovation passports to meet. So, like we've seen with PAS 2035, that's given a clear standard for how retrofit advice should be delivered and co-ordinated. Having that Government backing can give people trust and confidence, and having really robust upskilling and monitoring and checking, once building renovation passports are out in the real world, can help support. So, I think it really is, to Matthew's point, part of a wholesale process that tries to create confidence for the consumer, and obviously Government involvement or Government backing of some sort can help to drive that.

Okay. Linked to that is the role that decarbonisation targets may have in getting people to pay attention. Is it a carrot or a stick or a combination of both that's needed to ensure that everybody realises that no change is not an option?

Matthew, first of all, then.

I think they have a role to play, and an important role to play, longer term targets. They do need to be realistic and they need to be achievable, and for them to be achievable there need to be things put in place to enable that, so things like the guidance and the communications campaign we talked about, things about increasing the retrofitting sector, getting those surveys able to be carried out at a scale necessary. All of this funding piece, both private and public, that all needs to be in place as well to enable those targets to be reached. But, actually, the targets can be useful in setting the longer term goals.

So, do you think there's a role for your organisation and the building societies to come together and say, 'This is the standard we're going to require before we'll lend money on something'?

No, I think the standard probably needs to be something along the lines of an EPC, if you're talking about achieving targets.

Just to come back on that—

Yes, Paul.

I think putting it through ourselves and UK Finance as a lending community can achieve something, but actually of the homes that are owner-occupied in the UK, there are more without mortgages than with, so our influence there is limited. If this is going to work across the sector, the first thing to do, as Emma says, which I completely support, is to get the standards correct, and then the consumer protection to make sure those standards are delivered, so whether that's with TrustMark or another scheme type.

Then to come back to your point about is it carrot or stick, we've got this groundswell of desire, if you like, from people who would, if they had this information, start to take action on their properties. So, if you've got a renovation passport that gives you a pathway to net zero—'These are the works that I need to undertake. This is the most effective sequence, if I don't do it all at once, and then I can achieve that path'—well, let's enable those people with a carrot to start taking that action. As there is a groundswell and more data then available, that will create more consumer demand. Ultimately, you're not going to get everybody wanting to do this, but further down the line you can then bring forward policies that encourage people more starkly, shall we say—whether it's a stick or whether it's a thicker carrot, I don't know. But that's the kind of approach you'd take. But if you've got demand there now and you've got that protection in place, then let's start with that and let's use that to grow the groundswell of demand for this, going forward.

Thank you. Thanks for that. Sorry, Chair.

There we are. Thank you, Jenny. Janet.

In terms of stimulating demand, what are your views on the retrofit measures? How should they be stimulated? I'm No. 7, aren't I?

No, you're—

No. 8.

Okay, let's come to Joyce, then, shall we? Thank you.

Thank you. I want to know about demand for retrofit measures and how you are going to stimulate people. And what is the role of yourselves and Government? We know now there is almost a perfect storm for people to really want to do something about this. So, how should we do it and how should you do it—or is there a role for you?

To start off, to be clear, the mortgage and finance industry, and the banking industry more generally, is committed to net zero and decarbonisation. So, we want to see that happening. We have a role to play in that, but we can't be expected to do it alone, for a variety of reasons, one of which Paul's already mentioned, that actually most properties in the UK don't have mortgages on them, so obviously there's a limit to what mortgage lenders can do there.

I think, fundamentally, we need to have a clear direction, as we've talked about, a strategy, and that needs to be convened by Government. They need to use their convening power to bring together all of the stakeholders to start driving this across the piece, so that all of the stakeholders are talking the same language, so that if you're a home owner, you know what is expected of you and what can be done. And then we can have targets in place that help set out that pathway. And then we can look at things like the financial products and how you can utilise marketing and that kind of stuff to drive that forward. But, there's a broad ecosystem here that needs to be in place to drive up demand.

To add to that, I think it's difficult for mortgage lenders alone to stimulate demand, because I think most people would agree that nobody really wants a mortgage, they want a home, or they want to undertake improvements to that home and a mortgage is a means of getting there. And creating demand by saying, 'Come here and borrow more money', in a difficult time, is not a great sell for people. So, actually, the demand has to be right across the piece and for people to buy into that context of, 'I need to improve the energy efficiency of my home and these are the benefits to me: better quality of life; warmer; lower energy bills and all of that; more comfortable; greener, healthier, safer environments, and that type of thing.' We have a role to facilitate people to improve their lives and improve their homes, which we stand completely behind. So, we can educate people once they come through our door, but if somebody's buying a house that needs renovating, they've made that decision before they've knocked on the mortgage lender's door, and if they want to improve it, nine times out of 10 they've made that decision before they arrive at the mortgage lender. So, it needs to be broader than that. We can help step them through the process. 

The other thing that needs to happen in terms of stimulating demand is to make the process as clear and frictionless as possible. So, for me, sitting there and thinking, 'What a great idea, I really want to understand what I can do to improve the energy efficiency of my home', where do I go to get that plan? How do I know that that organisation is a trusted organisation? If something goes wrong, where can I go? And what is the most suitable finance option to deliver that? Because if you're doing a whole house refit that might cost you £50,000, then that might be a mortgage proposition; if you're looking at some insulation that might cost you £2,000 or £3,000, then there might be more efficient ways for you to finance that. Our role is to help people navigate that pathway.

Do you mind, Joyce, if I just come in and ask what might be a bit of a left-field question? Clearly, if a house is more energy efficient, then the living costs for people in those properties are lower. Has anybody made a correlation between people defaulting on their mortgages and the kinds of costs they face on a monthly basis? If it's cheaper to live in the house, then they're less likely to default. I'm just trying to bring it back to whether it might be in mortgage lenders' interests to encourage this to happen.

I think there are two things. There was some work done some time ago—and Emma will be closer to this, so I'll defer to Emma in a moment—but in terms of some work that was done a while ago by the central bank, by the Bank of England, it showed that there was some correlation between better mortgage performance and those who improve the energy efficiency of their property. Now, that to me isn't empirical evidence that there is that correlation, because actually previously, if you were about to undertake energy-efficiency improvements, you were probably in a more affluent situation anyway and therefore less likely to default.

In terms of the affordability, if your energy bills are lower, there's an argument that you ought to be able to borrow more money on a mortgage because you've got more disposable income. To date, that isn't something that's happened. There have been some pilots and some lenders have dipped their toe in the water here, but actually, overall, most people don't borrow to their absolute borrowing capacity anyway. So, it hasn't hitherto made a material difference.

Okay. Emma, I'm sure you're keen to add to that.

Yes, just to add to that. Paul mentioned that there was the Bank of England research a couple of years ago, and when I was at Barclays, we ran some very similar analysis and found a very similar outcome, that default rates were lower on more energy-efficient properties. But it really was a demographic signal, or an economic signal, rather than necessarily being completely related to the property, because if saving £100 a month is going to make a difference to you falling into arrears, then you're probably at the lower end of the credit score already.

However, a couple of pieces I would add: Barclays was able to innovate their green mortgage product off the back of that information, so they were able to become one of the first high-street banks to launch a green mortgage product. We have seen a number of lenders start to explore whether they can include more accurate energy-efficiency information, and energy bill information in their mortgage affordability calculations, and there was the lenders' project about five or six years ago that showed that people could borrow about £5,000, £6,000 more if they bought more energy-efficient homes. So, not huge, but not immaterial.

One of the other pieces that we frequently hear cited is whether there is a value uplift in your property from undertaking energy-efficiency improvements and whether that will have an impact on your borrowing powers. There was a report launched by Santander just last week that showed that people are willing to pay something like a 9 per cent uplift in property values if it's more energy efficient at the moment. I'm happy to send the report to the committee. But there's a growing evidence base that energy-efficiency measures can result in higher property values.

The final bit I'll just add to that is that I agree with what Matthew was saying, which is that finance is an enabler; it never drives demand. So, you don't wake up and say, 'I want to finance a project'; you wake up because you want to do that project, and finance is going to help you do that. We were speaking with some US lenders a couple of weeks ago around a solution in the US called PACE—property assessed clean energy—and they actually said that the most important reason for people to use it was that it was highly integrated into their retrofit process, so it was easy for them to use. So, I think, sort of flipping it on its head, there's an exciting role for finance to play in integrating itself with these retrofit organisations, so that as a consumer you almost have a seamless journey, a one-stop shop, where it's easy to get your finance to undertake your project, rather than you having to go off and find your x thousand pounds. So, just a final bit, just to say that making that customer process and journey as easy as possible and integrating the whole value chain is an important step, if maybe not the first step in the journey.

Excellent. Yes, Cenydd.

[Inaudible.]—as well, specifically about demand, and specifically demand in Wales, is with regard to the recently launched Rhondda Cynon Taf solar panel scheme. So, I was speaking with RCT last week, because it very much chimes with a lot of things that we've been looking at and how they manage to deliver it quickly and bridge the shared prosperity funding, which they've done very innovatively. The really interesting bit of feedback there was on the level of demand, because this has been one of the key considerations from a financial perspective, not necessarily what do you need to drive demand, but where's the tipping point for people between, 'It's not viable; too much risk', versus, 'Actually, that's enough support to give me the jolt in the right direction.' And the RCT solar panel scheme is quite a modest level of grant relative to the overall cost; it's only up to 25 per cent of the full cost of the solar panels, capped at £1,000, but the level of applications has already exceeded all expectations. I'm think I'm right in saying there were 100 completed applications in the first week, and a much higher level of enquiries as well, and that seems to be continuing. That does seem to bring us back to this point that people's demands and priorities have changed, because of the current prevailing conditions. So, that tipping point, I think, is far lower than we thought it was when we started this journey in building our understanding a couple of years ago.

Yes, okay.

That's very useful information. And following on from tipping points, what are your views on introducing regulatory standards and then, of course, sanctions for the privately owned sector? And what sort of potential, if you're able to answer, do you think that impact would have on the housing market in the first place, but particularly rental properties?

Just to clarify your question: you said 'the private housing sector'; did you mean to say that, or did you mean to talk about just the private rental sector?

The privately owned sector.

Yes, generally.

Generally. Can I just come in here just in terms of the—? So, where we're seeing it perhaps a little bit at the moment is in the private rental sector, where the UK Government has consulted on proposals to introduce targets for EPCs in that sector, in addition to the ones that are already in place, so it's increasing them. They're actually not in place at the moment, but those proposals have—. We are starting to see some early indications that that has changed the market somewhat, and, actually, more savvy landlords, particularly those who are more professional and have larger portfolios, are looking to exit the more energy-inefficient properties and moving to more energy-efficient properties. That's obviously quite an early indication, and the hard data for that hasn't actually fed through yet, but that's perhaps an indication of what could happen in the broader marketplace.

Can I just follow through? So, what you're saying is they've got large property portfolios, some of them they know aren't going to meet it, so, rather than invest in them, they're abandoning them, they're just leaving them, and then they're going towards more cost-effective ones for them, because they haven't got the—. Is that what you're saying? I just need to understand it.

As I say, it's quite early days on this at the moment, so we don't have the hard data on it, but there are some indications that perhaps some landlords are looking at doing that.

We've seen that too, where we're seeing some landlords say, 'Well, actually, rather than invest in this because, as a landlord, I'm not getting the benefits, because it's my tenant that's saving on the energy bills, I'd be better off offloading this property and buying something more efficient.' That then creates its own challenge: that housing stock then becomes more available for potential first-time buyers, who are less able to pay to improve these properties.

To answer the other part of your question, which I think relates to regulatory targets, perhaps, for owner-occupied homes, we've seen some suggestions over recent years that, actually, the carbon footprint of a mortgage lender's book should be taken into account through some type of league table, for example. So, therefore, you ought to target your lending at anything that's above EPC C, which sounds fairly sensible, but, actually, that isn't where the greatest benefit is. The greatest benefit is improving those properties that are below EPC C to reduce a larger carbon footprint and make a bigger difference in people's bills. So, actually, just targeting those higher EPC properties might lead to some unintended consequences, where you end up with some stranded assets, because people can't sell those homes, or you might see some lenders target more energy-efficient properties, which then distorts the market. So, I think, for me, the EPC A to C is great, but, actually, it's those that are below that we really need to start to bring up to standard if we're really going to achieve our ambitions here, so we need to be focusing on those and not creating unintended consequences through regulatory intervention.

We got really deep into carrots and sticks in a previous meeting, and I think it was Huw that was making the point that for the private sector—. And it comes back to the point Matthew was making about a long-term plan. If Government was clear that in 10 years or in 15 years we expect the whole of the private sector, private housing, to reach a certain level, then, clearly, there would still be challenges, of course, in terms of financing much of that, but those who are able to would at least get a move on, surely.

We've mentioned EPCs a lot here. Are we convinced that that is the best measurement of energy efficiency? We've had some evidence that maybe it isn't necessarily the best way of seeing whether something is great or not. Matthew, you mentioned EPCs earlier; maybe that's just because that's what everybody uses. I don't know whether you have a view on that.

It's what we have at the moment and what's out there. It's not the ideal system. There are some ideas about using, say, smart meter data and drawing that in and using that, potentially, instead. I guess, EPCs, we have them at the moment, they exist, large numbers of properties have them and they are a useful tool, so that's why we talk about them.

I think there are some very definite things you could do to improve them: in terms of targets, making it clearer whether you're talking about energy efficiency ratings or energy impact ratings—that would be very important—just filling in the gaps of the properties that don't have them at all at the moment in a coherent way would be a really good thing to do; updating the system more regularly, so that the information flows quicker, and, actually, if you do make an improvement to your property, you don't have to go and get a whole new EPC, you can maybe just add points into it; and, of course, just making sure that, actually, the process for getting one on a property—if they're going to have a broader role within the housing market than they do at the moment, making sure that that whole system is improved so that there is more consistency and that they are carried out to a really good standard. So, there are flaws, but they are what we have at the moment.

Sure. Okay, fine. We need to make progress now, so thank you for that. We'll move on to finance then, now, and Huw.

Thanks, Chair. Good morning, everybody. Before I delve into some detailed aspects of possible potential future financing, can I just ask whether, in light of the discussion we've had already, there's anything anybody wants to add in terms of why the measures, the financial options, we currently have in place in Wales, have failed to deliver meaningful progress to date. We've had quite a bit of discussion around this, but is there anything you want to add before I delve into some detailed points?

I would say it comes back to probably one of the first points we discussed about that holistic strategy. So, there are a number of actors, all with very good intentions and some with varying levels of success, but definitely some good examples of successful schemes out there. I think that the overarching strategy will enable the scaling up of those and the ability to complement them with solutions that aren't currently provided. So, I do think it comes back to that initial point about the strategy and plan. 

I was very taken, earlier on, with the discussion around people don't get up thinking, in a business plan sort of point of view, 'How do I get make money out of a particular scheme? How do I get best bang for my buck?' They wake up thinking 'How do I, over a sustained period, make my home nice and comfortable and warm and cost-effective?' I just wonder whether you have any thoughts on whether previous schemes have tried to measure it too much in cold, hard cash terms, as opposed to the wider narrative for people of saying, 'Well, actually, this is about your lovely home.' 

Emma. 

I fully agree that we do need to take the conversation and not always focus it on the energy bill savings or the costs that you'll be making, and actually focus it on the more, as you say, wider holistic elements of a more comfortable home, a healthier home, because, particularly if we look at more vulnerable households, what the evidence typically shows is that, when people have their property retrofitted, their energy bills don't go down, they just heat their house to a more comfortable temperature, so they're actually benefiting from a much better quality of life. So, I do think there does need to be a bit of a disaggregation of that. I think the messaging also needs to be targeted for different demographics. So, very few people actually retrofit their home for climate reasons and, actually, to date a lot of the messaging has been around the environmental benefits. So, we have the cost-of-living crisis; we know that people are wanting to take action, so that's something we can play into, and there's some really good research done by various different organisations exploring what messages appeal to different people and when. So, yes, I think there does need to be a bit of step back on the messaging around energy efficiency, and I think also where those messages are fed into needs to be diversified. So, we often see the messaging has come out of grant schemes or government-backed schemes, but is there a role, for instance, for mortgage intermediaries, mortgage brokers and mortgage lenders? Just to say, about 80 per cent or 90 per cent of UK mortgages are originated by a mortgage broker. They have very strong relationships across the industry; they have very strong relationships with their consumers. Could they actually be educated to a degree to be able to have some trusted conversations with customers around energy efficiency, particularly if we are going to see targets coming in and tightening? So, I think there needs to be a slightly broader conversation and broader language around energy efficiency. 

Okay. Brilliant. Well, let's delve into some of those. Let's start with that role of lenders within decarbonisation of private sector properties. Is there anything that any of our panel would like to add to that, including the aspect of green mortgages? And what evidence do we have of any uptake on green mortgages, or why mortgage customers are taking them up or why some are not taking them up? So, that role of lenders—any thoughts on that?

Paul. 

Yes, I'm quite happy to come in there. Firstly, just to follow on just one thing that Emma was saying about the role of the mortgage broker, I think that's really, really important, because many people will go to their mortgage broker and say, 'Actually, I want to carry out improvements to my home', and it's at that key point where you can say, 'Well, actually, if you're carrying out these improvements to your home, whilst the bonnet is up, it is far more cost-effective to improve the energy efficiency than then retrofit later.' So, actually, that's a really, really key point.

In terms of green mortgages, we've had green mortgages and green further advances available for some time to either fund decarbonisation works or mortgages on properties of a certain energy efficiency—A to C, typically. Most consumers, I think it’s fair to say, are relatively unaware of them, because hitherto, again, we’ve not had that demand, and typically they’ll give a bit of a discount to that. So, we’ve seen with new-build properties at the moment, many of them will qualify for a green mortgage because they’re built to a higher energy efficiency standard, but we do need more and faster innovation in this space, which is something that we at the BSA are working on. We have a green finance taskforce, and we’ve been having conversations with Emma and her colleagues at the GFI about how we can achieve this in 2023. But the term 'green mortgage' for most people is pretty meaningless, so we need to explain better the benefits of taking a mortgage, whether that's a discounted rate to carry out energy efficiency improvements, enable them to understand that, and I come back again—there’s a great role there for mortgage brokers to play.

The other thing as well that I mentioned earlier on that I just come back to is we need to focus these mortgages at the most energy-inefficient properties to make sure that the consumer gets a better saving, a better bang for their buck, and we have a greater reduction in carbon footprint when undertaking those improvements. But there is absolutely a role for mortgage finance, and we do need to innovate in this space.

Emma, can I ask, as you were mentioned there, for your thoughts on this, but also any feedback you’ve had on the lender’s handbook of green home technologies?

Yes, of course. So, we monitor the green mortgage market very regularly, and we have a green mortgage hub online, so we’ve seen an explosion in products. Four years ago, there were about three green mortgage products on the market; there are now over 50 products, so lenders are innovating, as Paul said. They’re taking their initial steps into this space, offering mortgages that support people to buy an already energy-efficient home, mostly so that they can get their operating systems set up, and then they can start to explore those products that help improvements in energy efficiency.

One thing I’ll also add—and this comes off a point Paul made earlier—is that only about 40 per cent of people across the UK have a mortgage, and many people as well once they've paid off their mortgage don’t want to take it out again, so we do need to start looking a bit more broadly beyond green mortgages to how can the unsecured lending market also help homeowners—how can we develop green propositions there?

Coming to the lender’s handbook, though, we published the lender’s handbook about a year ago, off the back of some conversations with the industry that identified that many mortgage product leads, many mortgage individuals, were not fully confident in what the green retrofit market actually entailed, in particular what the opportunities were, what the risks were, the upcoming policy landscape. So, we published a handbook that captured information on all the key technologies and we worked with the likes of MCS, the Energy Saving Trust and other leaders in this space to develop it. What have we heard from lenders? We hear some lenders say that they use this on a weekly basis as they start to develop their propositions, because they want to be confident that they are developing a proposition that properly helps customers, that they’re appropriately managing risks. So, we, actually, also working with Paul and with Matthew and with a number of other organisations, are now adapting the lender’s handbook for that mortgage broker community, again to give them lots of information that their own trade associations can go and take and turn into training materials. So, it really is around upskilling and educating not just the mortgage lenders, but also the mortgage brokers, and what we’re really keen to start doing is—and this hasn’t been mentioned yet—really starting to look at place-based education, place-based, targeted campaigns to try and raise awareness in particular regions, and then demonstrate and explore how that targeted engagement, targeted education, can translate through into more support for customers.

Okay, that’s brilliant, thank you. I’m going to work through into some of the detail of some of the proposed possible proposals now, and I wonder—. First of all, though, could I ask the Development Bank of Wales for any update you may have on the proposal with Nesta to have a targeted pilot fund to support private sector housing retrofit in 2022-23?

Absolutely. This has been a key part of our agenda for a while. It is part of our strategic objectives for this financial year—one of three measures in the green space that we’re looking to complete this year. So the Nesta research has definitely been key to the formation of our thinking in terms of what could be the most effective way of quickly mobilising some action in this space. That report was received last week, so we’re currently in the process of analysing that, and we’ll be working with Nesta and other stakeholders, including Welsh Government, to make sure we really understand what has been a very thorough piece of research, and I think, as mentioned the other week, probably the largest direct survey of home owners that's been undertaken on this specific topic. There's definitely a lot of good information from that.

The other requirements, dependencies for the completion of our task on the pilot programme is feedback from the optimised retrofit programmes. So, we're working with the ORP team in Welsh Government who've committed to sharing that feedback as soon as it's ready. Likewise with other programmes such as the Warm Homes programme—the feedback within the reports on that to make sure lessons learnt are all integrated and that we're trying to position the retrofit pilot to be as effective as possible. The actual business case submission of that to Welsh Government we've committed to do by the end of the financial year, so by the end of March. Clearly, we'll do that sooner where possible, and, as soon as those reports are ready to digest and synthesise, we shall do that. 

That'd be brilliant. Anything you can share with the committee when your analysis is ready I think would be really welcomed. 

Of course. 

Okay, let me turn, then, to—. I and a colleague are going to ask you for your views on particular finance options. Let me start by throwing out to you three that are at the forefront of our minds here. One is green equity release. We were talking about that issue there of people who've paid off their mortgages but still have value in their properties. Is this a useful and viable option, or is it something that scares a lot of property owners in terms of equity release, whether it's green or not. What can we do with our variable land transaction tax in this space, as well? And finally from my contributions to this, any views on property assessed clean energy linked to council tax? Council tax is something that always excites residents, and if they think that this is a possible financial incentive—a carrot—then maybe that's a way forward. So, any views on these? Emma, I can see you've got your hand up already.   

Yes, happy to come in on the equity release and the property assessed clean energy side of things. So, we are aware that the Equity Release Council has started to turn its attention towards green equity release solutions, and I believe that Legal & General have already issued or launched a green equity release product to help later-life customers to improve the energy efficiency of their home. It is no different to how a green mortgage works, in the sense that the use of proceeds—the money you've raised—can go towards green activities. It just needs to be set within the wider context of a stricter and more consumer-friendly equity release market. So, there's a bigger question to be asked around equity release, but, if that works, using the proceeds for green improvements in theory should be fine, as long as you verify that the funds have actually gone towards green. Otherwise, you're at risk of greenwashing. 

On property assessed clean energy, I'm now going to start calling it PLF—property-linked finance—which is something that we've been really exploring at the Green Finance Institute for several years. Last month, we published a report that included those consumer trends, consumer survey results that I mentioned earlier, but we also explored consumer appetite for a property-linked finance proposition. We describe this as some type of financing that is linked to the property that helps you fund energy efficiency improvements, and when you sell your property, that finance's repayment obligations remain with the property, rather than moving with you. So, it helps to address the fact that many energy efficiency measures have long payback periods. What we found was that almost two thirds of the people that we surveyed said that they were interested in property-linked finance if they were to improve the energy efficiency of their property. And they were particularly interested due to that property-linking factor. So, that shows that there is a latent demand for some kind of new, innovative financial product.

We have been exploring how you can link finance to a property, and how we've seen it done in the US and Australia is through a property tax. Council tax is one potential option. However, we've also been exploring some other options that would require a very light touch from councils, if any, to try and remove the burden on the public sector. And we're exploring whether something like a local land charge or a service charge could actually be used. We are working with a number of leaders across the market, including the Development Bank of Wales, who came along to some sessions we did last week, to explore how property-linked finance can be introduced into the UK very rapidly. And we are just developing a prototype model for what it looks like, so I'd be more than happy to come back to the committee and share some more details on that and the opportunities that it presents down the line. But I thought I'd just share that it is a solution that does appeal to consumers.

That's great. Thank you. Anybody else from the panel have thoughts on that?

Yes. Matthew.

I'd echo Emma's comments on the green equity release piece there. In terms of the other two options, we would very much support moves to use variable land transaction tax to drive retrofitting. It makes sense to do that. When people buy a property, often they come in and do lots of work to it anyway, so if there is some incentive, perhaps some sort of rebate, within the first couple of years that helps support them to do that, and actually get the green retrofitting measures put in place at that stage, we think that it'd be a good thing and well worth exploring.

In terms of the use of council tax more broadly, I guess it just needs to be balanced against the income take for local authorities. There are always budget pressures there, so I just think it needs to balanced to make sure that rewarding home owners for doing green things to their properties doesn't end up costing somebody else further down the line who then relies on council services.

Yes. Cenydd.

Specifically on the green equity release products, which was one of the solutions that was included in the Nesta research, quite surprisingly for me, that was one of the lowest in terms of potential uptake, on the feedback from home owners. It's not too different to what we see in the business equity space in Wales, which we have a good insight to in DBW, where the notion of, 'I don't want to give up a slice of what I own' is a strong characteristic and a difficult one to overcome, despite being able to point to a number of very good reasons why it can be an effective solution. Interestingly, that does also chime with our experience through running the Help to Buy Wales programme, where our initial forecasts about how long the equity charge would remain attached to a property were far longer than what's proven to be the reality. So, the data from that shows that, as soon as someone is able to repay, whether that's through a refinance type of option or, clearly, if they're selling the property, they'll do so. So, the point is repayments happen much earlier, and I think that does reflect this idea that people want to own their homes and not give us or anyone else a stake in it—that is how it's seen.

Paul.

Just very briefly on that one, one proposition we've not discussed is this first-time buyer. So, if first-time buyers are going to be buying more energy-inefficient properties potentially, then, actually, that kind of help to green-type equity loan could well help incentivise and give them the opportunity to improve their homes. On the equity release piece, I too think this is a good development, but I'm not surprised to hear what Cenydd said there about lowest uptake, because people still have some nervousness around equity release, because they think the interest is going to grow and it's going to eat into the inheritance that they're then going to pass on. One thing I would say is, actually, the innovation in that space has been quite remarkable in recent years, so people have got the option to ring-fence that equity that they've borrowed and service the interest, if that's what they want to do, to continue to protect that. So, I would encourage people to explore all financial options, of which that is one.

Excellent. Okay, thank you very much. We covered a lot of ground there. One other thing I wanted to raise directly with Emma as well are local climate bonds. Maybe you could just tell us a little bit about what they are and what contribution they could make, and whether you're aware of any examples in Wales.

Absolutely. So, local climate bonds, sometimes known as community municipal investments, were innovated by one of our coalition members, Abundance Investment. They are a way for councils to be able to raise funds through crowdfunding. They issue a local climate bond, local investors can invest from as little as £5 into a local climate bond, and then that bond is used to fund green activities in the local area. So, local citizens can see environmentally positive actions happening in their local area from their own investment. We have seen six local climate bonds issued to date—that's in west Berkshire, Warrington, Camden, Islington and a few other areas as well. We also know that Blaenau Gwent have signed up to our local climate bond pledge, so they're particularly interested in exploring this solution. The local climate bonds that have been issued to date have not raised dramatic amounts of money; they've raised £1 million each, which is still a meaningful investment. But the really important benefit of local climate bonds is twofold: one, they're priced lower than Public Works Loans Board, so they are cheaper for councils; and the second is that they drive really strong levels of community engagement because citizens are investing in green activities, and there's promotion and marketing beforehand. So, it helps councils to promote and get consumers and their local citizens on the decarbonisation journey. We would be thoroughly delighted to discuss this either further or speak more with councils across Wales to explain and do some myth-busting around local climate bonds, because they do present an exciting opportunity.

And the final exciting piece about local climate bonds that we've started to see with some recent issuances is that it's also an opportunity not just for citizens, but also for businesses to invest in. So, businesses that have a corporate social responsibility purpose or have some budget that they want to invest in their local communities can invest in these local climate bonds, and that kind of investment could actually help these climate bonds go well beyond the £1 million mark and start to have a really significant impact. So, we're happy to keep you posted with how that's developing, and we think it's an exciting solution both for Wales and broader across the UK.

Yes, absolutely. Please do keep us posted. There's a lot of nodding heads here. That sounds very exciting. Excellent. Okay. Diolch yn fawr iawn.

Just finally on this, then, before we come on to Janet for the next section of questioning, presumably the UK Infrastructure Bank has a big role to play in this space. Yes. One-word answers are fine. What would you expect them to do, then, maybe, if I should ask a more open question? No? Okay. That's fine. I'm not going to force you to say anything. It's taken as read that they could well be involved in it. Yes. Emma—thank you for putting your hand up. There we are.

I'm happy to speak for the team. So, absolutely, the UK Infrastructure Bank can play a really important role. We know that, earlier on in the year, energy efficiency was brought into their mandate and we know that they're exploring some exciting options there. Given the scope of their mandate, there's some really exciting options that they could support. I think, in particular, the fact that they can provide guarantees—first-loss guarantees—which help to bring down the risk of lending, there are really exciting options for how that could interact with either the mortgage sector, with green mortgages, or in some of the unsecured consumer finance space as well. So, I'd just add I think there is definitely a role for development banks to play here, and it doesn't just have to be funding big projects; it can be helping consumer finance as well, but working through the banks to deliver that.

Okay. Thank you. Right, we've got around about 15 minutes left, so we might need to run through these next few questions quite quickly, and we'll start off with Janet.

Thank you. How far do you believe a lack of householder understanding about some energy efficiency technologies is a barrier to progress?

Cenydd.

I think that's a substantial barrier, and again that's played out in a lot of the research. But I think there's an awareness about the lack of understanding, and that's really played out in what is often cited as that collective need for a central repository of information that people can rely on and really trust. So, it comes back to that point, I guess.

What organisations do you believe should have a role in awareness raising and improving consumer understanding of energy efficiency technologies?

Well, I think that there are already a lot of actors in this space that do have a lot of value to add, and it's that co-ordination piece. So, I don't think it's about reinventing the wheel. One of the options we're considering within DBW is whether we would set up an advisory department, which, of course, we could—we don't have that kind of technical knowledge in-house yet—but we don't think that's either necessary or an effective way of doing it because a lot of this knowledge already exists out in the market. It's about co-ordinating it, and, from a consumer perspective, bringing it into that, I hesitate to say it, one-stop-shop type of arena where all of that necessary information is already contained, similar to what we've done with the hub in the social care sector, so that there's that one repository of information that people can rely on.

Have you had any conversations with the Welsh Government about filling that space?

Yes, at high level, but I think the exact role of the development bank in this is to be determined—the size and shape of it. We're definitely keen to play as key a role as we can whilst also making sure we are complementing what is out there. We certainly don't want to start competing with existing solutions that are already doing some good. So, again, that co-ordination piece, I think, is definitely a key role we can help with.

Do any of the other members feel—? Where do you think that advice should be coming from?

I think they're satisfied with Cenydd's answer.

Yes, I think a one-stop shop for advice is really, really important—a trusted place for people to go. As we've discussed already, people don't really know how to navigate this process. They don't know about the technologies. It's a bit intimidating for them. We talk about ground-source heat pumps and air-source heat pumps; it doesn't mean anything to most people. It's about getting that right solution for the property. So, that central place to help people step through that process and understand what is a right solution for their particular property and their circumstances is vital.

Okay. Fine. Delyth.

Diolch. I'm aware of time, so just briefly, do you think that this lack of public trust that's already come up quite a bit in the session already, that lack of understanding, lack of trust in energy efficiency measures, is a barrier to progress? What's the best way of tackling that? I'm guessing that you will say that it's a barrier to progress. Are there specific things that you think that the Government could be doing with other organisations to overcome that?

I'll start. Yes, unsurprisingly I do believe that is a barrier. Actually, it is a barrier, but it's not the first barrier. The first barrier is getting people engaged with the process, and then other concerns come out, and it is getting that trusted provider. We talk quite often about a retrofit industry that doesn't really exist. It's like a housing market. There's no single homogenous housing market. There are lots and lots of regional factors. So, I think, for me, it's about information, and then it is about some sort of accreditation, whether that's the Welsh Government continuing its support to TrustMark and developing that, to make sure that that works for people and gives people redress and advice if something goes wrong, or confidence in certain suppliers. It's absolutely key that once people engage with this process, they know that the provider that they're going to engage with is going to deliver what they've said they're going to deliver, and if they don't there is protection there for them. I think, often, when people are engaging with a new industry that they don't understand, it's really, really intimidating, and the easiest thing to do is nothing at all.

I was only going to add one other point to what Paul said, which is that we've seen, as well, that one way of trying to help address some of that nervousness around retrofitting and the technologies is aggregation schemes. So, for instance, there's a scheme called Solar Together, which allows people to sign up to an area-based solar panel roll-out, and they can become part of a group purchasing scheme. They're very helpful, those schemes, (a) because they help to bring down the costs, because you're bulk purchasing the technologies, but (b) because your neighbours are doing it, other people up the street are doing it. It gives you that confidence and that sense that you're getting involved in a trusted process. So, I think rolling out aggregation schemes and embedding finance into those aggregation schemes is an important next step as well, to try and help address that consumer confidence issue.

That's helpful. Cadeirydd, I'm very aware that we need to get through to other areas. I'm happy to leave it at that.

That's fine. We'll move on, then, to Jenny.

Thank you. Just one question from me. Owning a property for rent is a privilege, and we require people to have gas and electric safety certificates. How can we incentivise private landlords to really start to focus on the energy efficiency issue, particularly bearing in mind that 40 per cent of them don't have a mortgage, so they could easily take up these green mortgage incentives or bonds?

I think we've talked about how we can incentivise it to a degree using targets and how that can drive landlords to make improvements to their properties. You mentioned some of the other things they already do to provide resources for their tenants. I think we do need to just be wary of unintended consequences to targets that are unrealistic and are not easily met. I mentioned some of the anecdotal evidence we have about landlord issues, but actually I think they can be broader, and with all of this we need to just be aware of the potential for certain properties to become very unattractive and the issues that that could cause. And then, just to reiterate, we need long-term clarity in all of this, and actually that will drive landlord behaviour.

I understand we need realistic targets, but if we set some long-term targets now, would that be an incentive to get people to pay attention now?

I think yes, if we have minimum efficiency standards that are ramping up, then that drives behaviour.

Great. Thank you. 

Thank you. Joyce.

To Cenydd: we've had the ORP; how can any learning from that be transferred to the private sector, including any mechanisms for that and any capacity or constraints within that? 

We're expecting a lot of key learning to come out of the ORP reviews. I mentioned before that we are in conversation with the ORP team, who are committed to sharing those findings. I think a particular opportunity there is leveraging the skill base built within the housing associations and RSLs that have been completing the work through the ORP. One of the key challenges cited with retrofit is how you scale up and how you build this workforce quickly and adapt the skills base, but that has been happening, to a degree, within that social sector. So, it's about leveraging that and potentially even commercialising it for those housing associations and RSLs that have been engaged with it, offering them potentially an income stream, perhaps, as well to supplement their activities whilst really benefiting from the skills and experience that their teams have created in working through the ORP. As I said, the actual findings we are waiting on, but those are going to be key in terms of driving our thinking on the pilot retrofit programme. 

You will know, and we all know, that the Welsh Government Minister has adopted a 'test and learn' approach on the ORP. Do you think that that will provide, now, a springboard to rapidly start the decarbonisation of homes?

Potentially. It's a big question due to the extent of the challenges. So, the learning will definitely help shape our thinking. I know, for example, that one of the outcomes that is often cited, not just through ORP but other measures, is actually getting through that first challenge of getting a homeowner, an owner-occupant, on board and getting the measure installed. It's often seen as the end of the process and it's absolutely not. So, the value in the collection and use of the data subsequently is very important. We need to find better ways of doing that. But also the ongoing education of the users of the technology. People have equated it to opening a cupboard and seeing the deck of the starship Enterprise, which they don't know how to use. So, we can install technology and people aren't entirely clear what it means or how best to use it, and that itself could lead to inefficiencies, which goes against the grain, really, when we're investing the time and energy into installing them. So, yes, there are definitely key lessons there, but I think that learning is going to continue for a while yet. 

Okay. Thanks.

There we are. Thank you. We've more or less come to the end of our allocated time, so can I thank the four of our witnesses for joining us this morning? We've covered a lot of territory, and we appreciate the input that you're giving us as part of this inquiry. You will be sent a copy of the draft transcript to check for accuracy, but I'd like to thank you again for joining us. Diolch yn fawr.

The committee will now break until 11:00. So, I'd ask Members just to reconvene a moment or two before the hour so that we can start promptly at 11:00. Diolch yn fawr. 

Thank you, and thank you for inviting us today. Having a strategy would obviously be a good starting point. I think the challenge within it is that the private rented sector obviously sits in Wales, but minimum energy efficiency standards regs sit in Westminster so it's having that strategy with a joined-up policy. I think if you see the direction of travel of MEES, with it moving to an environmental impact rating, potentially, you then could have a diversion within one sector of housing, which can change between the housing sectors. So, I think consistency of message—which, to be honest, I say to all Governments—would be most helpful across this entire area. So, if you're going to have a strategy, have it so it can take into account what's happening in all three sectors, because properties change between sectors quite regularly. A private rented property could be rented to a local authority, become a social house, and it could be sold within that same year. You could have all three tenures in one property in one year. So you've got to have that flexibility within that sort of strategy going forward.

That's a fair point, actually, because we do tend to think of these as very distinct and static groups, or sectors, but obviously, that isn't the case, is it? Timothy, do you want to add anything?

Yes. Thank you. We agree. We see the importance at Propertymark of long-term national strategy. I think we would add that once that sort of long-term vision has been set out, there need to be some incremental steps built in—so, in the short term, setting out the targets, the route map, which can trigger investment, build the supply chain, the materials for home owners and landlords to engage with. In the medium term, it's that national communications campaign, to get that public buy-in. And then, I think, alongside the targets, the long-term vision, it's creating that consumer demand, so home owners, landlords, engage with it, can set their plans, can look at the finances and look at how it's going to impact them.

Sure. And Dan, anything to add on that?

Yes. Thanks. We certainly would agree that we need a long-term decarbonisation strategy, for the reasons already set out, particularly because houses can be part of different tenures. Within each tenure, there are different incentives and interests that would drive work to decarbonise housing. Indeed, you'll have objectives around decarbonisation, and where they link with the cost of heating homes and so on might not necessarily be obvious or easy to reconcile. And then there are separate issues about the housing strategy of the Welsh Government, as well—that all needs to be considered as a whole, as well.

Lovely, excellent. Thank you so much. Janet.

Thank you. So, to all of you, really, on how the Welsh Government should adapt its approach towards ambitions for decarbonising the private housing sector in light of the energy price and cost-of-living crisis, and just added to that, bolted on to that, when you mentioned about the minimum energy efficiency standards, the MEES, sitting in Westminster, is that going to complicate things greatly for us going forward? Because, to be honest, it's the first I've heard that—.

Okay.

Sorry—

No, I'm glad. It's what we take evidence for—

So, there are three different things there, I would say. If I start with MEES, minimum energy efficiency standards are what govern the private rented sector. The Westminster Government had a consultation that proposed moving that to a C, based on either energy efficiency or environmental impact rating, and that goes down two different routes. That also has a different impact on how you adapt your property. So, having a strategy—it's fine having a strategy with a target in the future of X, so decarbonise, zero carbon by a set date, but you've got to have those incremental targets en route on how to get there and how to support those on that route. So, if you go down the decarbonise route, that's going to change houses. So, effectively, you're moving from gas to electric heating, in effect. Now, that has an impact. Gas is 10p, electricity is 34p, so that's going to have an impact on cost of living unless you've improved the fabric of your building first.

So, actually, getting the fabric of buildings improved first dramatically impacts future decisions, and I think that that is where we could have a problem, in that we're moving to decarbonisation before we've improved the fabric of your building. Improving the fabric of the building would benefit everyone with the cost of living, because you're reducing the overall envelope of the building and its energy demand. That's the bit that's sort of glossed over for moving to nicer, shinier items, because insulation is not that attractive as, 'Ooh, I've done insulation'. You can't see it. So, moving to improving the fabric of buildings first, then moving towards the decarbonisation. I think any strategy going forward has to take into account what that journey is going to be and what the stepping stones on that journey need to be and how you're going to get to them.

Timothy.

I was just going to add to that. Alongside the consultation on improving the minimum energy efficiency standards for the private rented sector, the UK Government have also consulted on how they could perhaps regulate owner-occupiers. The consultation, which ran similar timescales alongside the MEES consultation for the private rented sector—both consultations haven't been responded to yet—was essentially looking at energy performance certificate C, but a voluntary target initially through lenders. So, that is also worth the committee exploring, because, of course, that will impact in England and Wales.

Okay.

Thank you. Yes?

Carry on.

How far do you believe the gaps are—it's a point I raised earlier—in the private sector housing data? When we keep saying here, 'private sector', I assume that we're talking about the private sector homes. I have a home, that's me, but then there's the private rented sector, so we're encompassing both, aren't we?

Yes.

I've made this point previously, I think, to this committee, in that I don't think we know where Welsh housing is; we don't know what the state of housing is in Wales. So, you don't know what that journey's going to be. So, what we need is an assessment of every house in Wales, regardless of tenure. Understanding now that we're getting to the argument of a property passport, et cetera on that, or you can go back to HIPS—home improvement packs, which are nice and controversial. [Laughter.] But if you do a property passport of every house in Wales, that then sets you up with what that actual strategy is going to be. At the moment, your strategy is going to be built on sand because you don't know what the housing stock in Wales is. You've got a best-guess estimate, but actually, having an assessment of every house in Wales—I know that the decarbonisation committee has said it could be done within three years—would give you the foundation stone for any future strategy for housing in Wales to be built upon. And, I think, if you talk about decarbonisation of homes, you need to know what the fabric of buildings are, where they are, and how they're built, and, also what can be done to those properties. 

How confident— 

Dan wants to come in, and Timothy does. 

Okay. 

So, Dan, first of all. 

Yes, thanks. 

Dan. 

Thanks. I just wanted to mention, coming in on the previous question as well, we have been looking at how data—. We have, in England, the English housing survey, which sets out quite clearly the EPC profile of private rented stock in England, and you can see over the years how that's improved. It appears that the MEES regulations have prompted improvements in bringing F and G properties up to E or above. How much further they could go, how much quicker they could go, that's another question, but we don't really have that similar data in Wales, so it's quite hard to see the success of the policy.

Just to talk about the cost of living, one of the interesting figures that I have seen is that, because gas prices are now so much higher, bringing up a property from E to C is worth £1,309 per year for a typical property. So, there's suddenly a huge saving for the tenant, but then that's not necessarily a saving for the landlord, so that incentive is blunted, to some extent, compared with owner-occupiers. I think, in terms of what needs to be prioritised, you could have huge savings for renters and a huge reduction in gas use by insulating the properties. One of the big issues that is being talked about around decarbonising homes is heat pumps, and, I think, we're not quite there with the private rented sector. There are so many homes that just need basic insulation, and I think Gavin was alluding to that earlier. I think the priority for the private rented sector should be the insulation first, and then other sectors may be more appropriate for developing the heat pump technology that is probably going to have to come in at a later date. 

Okay, thank you. There's a key message for us there. Timothy, you wanted to come in on the data. 

Yes, please. Just to reiterate, the data's massively important, and I think we would all agree that there are gaps in it. There are a couple of reasons for that. Of course, any analysis of EPCs doesn't cover all dwellings in England and Wales, because not all dwellings will have one; they're valid for 10 years; are they up to date? So, is that really a full representation of the dwelling stock? Secondly, certainly in Wales, the Welsh housing conditions survey has collected information about the condition and energy efficiency. However, we've obviously had the pandemic, but I think the last release was October 2019, and it was looking at the previous year—April 2017 to March 2018. So, I think, building on what Dan was saying, a solution could be a Welsh housing survey that is a continuous national survey commissioned by the Welsh Government or department that collects information on people's housing circumstances and the energy efficiency, similar to the English housing survey, going forward. So, it could be a useful template to look at. 

I suppose I have a couple of questions: do we have the relevant skills and the numbers, if we wanted to try and do a Welsh housing survey, even if it was over a three-year period? There's another way of doing it where we all, as homeowners, receive a form. The number of fail rates could be high though, because not everybody fills forms in. I would, so, I would say whether my house was insulated, whether it had a flat roof or a pitched roof, and blah-di-blah. So it does seem quite a challenge that we've got facing us, and I think this inquiry has, you know, really shown how important it is to get people like you in, because we've so many things to overcome now. 

Well, just to make one more point, certainly on the private rented sector side, you've obviously got the role of Rent Smart Wales. Do they have a greater role to play in terms of—?

I was going to ask whether Rent Smart Wales—because, at the moment, I'm minded to think that that could have a review of functions, in terms of making them more relevant. This would be—I think I asked previous witnesses whether they felt that Rent Smart Wales could play a part. 

It could. Ultimately, it's about understanding what the housing stock is, and that's what we don't know at the moment—whether it's owner-occupier or PRS, and not even social. What is the housing stock in Wales? What is its age? What is its condition? The question is that once you know that, you can then make a strategy, going forward. At the moment, we don't know what that is, so any strategy is going to have a fundamental flaw in it. So, whether it's a report going to every property and people expecting to report on it and return it—that would give you an indication. The archetypes in Wales—there's a rough understanding of what archetypes there are and then you can make best-guess estimates of what the housing stock will be. That would then develop the skills agenda and would develop the supply chains, and you could then see what the targets would be based on that.

So, a foundation stone for anything you do is understanding what the stock is that you've got today. Rent Smart Wales could play a part in that; they've got all of the EPC data. It was a proposal put forward to Rent Smart Wales for the latest iteration, but they did not take it forward. So, it has been floated in the past, to find out what that position is for the PRS, but that doesn't take into account all housing in Wales.

Sure, okay. Let's bring Jenny in here then—Jenny.

It is not perfect, but we've got a climate emergency. So, we clearly need to improve it, but are private rented landlords aware that the energy efficiency of their properties is so much worse than the social housing sector? And do they have sufficient awareness that there is a need for all of us to start addressing this? 

The private rented sector is guided by minimum energy efficiency standards. MEES are the enforcement regulation set down, under which the private rented sector has to work, and that currently is an E, so for any property that doesn't meet that, or that isn't on the exemption register, action can be taken by the local authority and Rent Smart Wales to enforce that, if that's not done. Landlords, on the whole, are aware that these targets are going to increase.

What I would say that there is a lack of is knowledge of how to move those properties forward, because there is a challenge at the heart of it: is it energy efficiency that we're talking about or is it decarbonisation? That creates a junction that sends people down two different roads. If we're talking about energy efficiency, yes, the fabric of buildings needs to be done, but if you start talking about decarbonisation, you are then pushing people to heat pumps. That is a considerable expense, because then you have renovation of the building to take place as well, on the whole.

So, I think it's about an understanding of what that direction is, and that's why it comes back to what the plan is, where the plan is going to go and what the stepping stones are. So, if it's decarbonisation, that sends you on one journey; if it's energy efficiency, you're going down a different route.  

Okay, I appreciate that; you're absolutely right. I think—I'm sure—that we're going to be going towards the decarbonisation route; you won't need to be a genius to guess that. But, do you think that these whole-housing assessments and building renovation passports would give landlords a clearer idea that they've got to start with insulation? There's no point putting heat pumps into a leaky home, because you just ratchet up the electricity bill? 

Absolutely, I completely agree with that. But I think it's a case that what a property passport would give you would be the guidance on what order to do things in your property, because what you don't want to see is people putting works into a property and then having to remove them in three or four years' time because they have to do something else. That's why a property passport would have the greater impact, because what it's looking at is how to decarbonise that property completely and what the journey is that that property is going to go on.

So, I think it's the stepping stones through that period that that property has to go through, with a sort of no-regrets policy so that you're not having to tear things out in future, because I don't think that would build confidence across Wales and the rest of the United Kingdom by having that sort of, 'Well, I put this in, and then I had to take it out to do this.' That's not going to build confidence. So, that's where the property passports have a strength to go forward. 

Okay, that's really excellent information. So—

Sorry, Jenny, Timothy wants to come in as well on this. 

Okay, Timothy.

Thank you, Jenny, thank you, Chair. Well, definitely, building on what Gavin has said, certainly from a property agent's point of view, in the private rented sector the minimum energy efficiency standards are legal requirements and must be adhered to. So, it's certainly on the day-to-day agenda of property agents, and I think, ultimately, until we know from the UK Government whether and when we're going to go to C, it's essentially a ticking time bomb of investment and cost, and there is a real concern amongst property agents about the ability of landlords in the private rented sector to jump from E to C. That is a significant challenge.

But what can we do? Well, certainly, as we've talked about already, engagement, communication with the sector, funding, what's the role of local authorities. So, definitely it is on the day-to-day agenda of property agents in their work. 

On building renovation passports, I think certainly at Propertymark we would say a whole-house assessment passport could be useful, and definitely warrants further scrutiny, because you need to facilitate a step-by-step approach to that retrofit. So, the consumer, the landlord, the home owner need to know in a clear and concise way how do they get to improve that property, and what the cost is going to be. I think the Irish Green Building Council did a feasibility study on introducing building renovation passports in Ireland, which the committee may want to look at. 

Sure. Okay, Jenny, you come back in, and then I'll ask Dan to reflect on some of the questions. I think Janet wants to ask something as well, and then we really will have to move on to the next area.

Okay. Just briefly, so, helpful information about the role of the passport to educate the landlord on the process, what about the role of Rent Smart Wales during the licensing procedures to raise awareness, to start giving some training about the way forward?

Can I just say—? Just before moving on to Rent Smart Wales, I think the building passport should also be looked at for owner-occupiers as well, not just landlords, because what we need to address are the barriers to consumer decision making. It's making that jump. We can put all the funding, the targets in place, but it's getting that consumer buy-in. So, a building renovation passport could allow perhaps a new owner to take on where a previous owner left off, so there's a record of the work that's been carried out and the planned work that can be done. So, it's definitely worth further scrutiny.

Okay, thank you. Dan, do you want to come in at this point?

Yes, I think from a private tenant's point of view, there is an existing online facility to help you understand your home, what its energy performance certificate means, and what options you have as a tenant to change things if you feel you're spending too much. I think one of the—. I wouldn't say it's perfect or ideal by any stretch, so, yes, I think there needs to be a much more integrated system to help tenants understand that, what grants are available, for example, and whether they're eligible for grants to get work carried out.

I would also add that a big barrier to the whole process is the tenant's individual confidence that they're going to be living somewhere for a long period of time, and the lack of security of tenure in the sector is quite a big barrier to that. So, when we've done research with private renters, a lot of people have—. One of the big barriers to asking for improvements is just the lack of confidence that a landlord would actually do the work that's needed. A lot of tenants are worried that their rent would go up once the landlord did the work, to pay for it, which could then cancel out the savings that they would get on bills, so there's a whole issue of incentives there, and then a concern that the landlord could ask them to leave and give them an eviction notice. I'm aware that, in Wales, the recent legislation will prevent that from happening, particularly if the property is sub-standard and needs work. The concept of the retaliatory eviction has been addressed by the Welsh Government, but we need to understand where energy efficiency or decarbonisation improvements fit into that, so that tenants are confident to talk to the landlord about it. 

Is there a role for your organisation just to raise awareness of how you insulate a home, whether it's just the cheap and cheerful, closing warm curtains, or—? Too many tenants just simply aren't aware that the landlord is supposed to be providing a home that doesn't leak and where the windows shut correctly.

Yes. We have information on our website. If someone is worried about their energy bills, we have some advice on there. I think there are groups that are Wales focused as well that have a role in that, particularly where there is the Nest scheme, for example. They'll be able to provide better advice on that.

Sorry to cut across you, Dan. We're halfway through our time and we're barely a quarter of the way through the areas that we wish to cover. Janet, did you want to very briefly come in on something?

I suppose, for the record, this generalisation that practice in the social rented sector are better insulated than the private sector landlord—. Would you agree with me that that's not strictly—? 

It's a generalisation—

Yes, it is a—.

It's a generalisation that is made quite regularly that, 'The social sector is this.' The private rented sector has got a wide variety of housing in it that caters for everyone of all types, and I think what you're seeing and I think what has been shown is that the private rented sector is making significant strides going forward to improve the fabric of buildings up and down Wales. So, I'd say the generalisation isn't helpful in this debate, because we've all got to get the same conclusion—saying, 'I'm better than you', or, 'You're better than me'—when we don't actually know about the vast majority of housing in Wales because the owner-occupiers have not been covered.

And therein lies the problem—we're back to data again, aren't we, really? 

Yes.

Yes. Okay. Joyce. 

We're going back to EPCs. [Laughter.] And we're going back to them simply because there are concerns about their appropriateness moving forward, and you've aired some of those. So, how do you think a Wales-specific measure could work alongside the UK EPC system? You've sort of touched on this, but I think we need some clarity here for people. So, what advice would you give us? 

So, an EPC currently: if you're looking at energy efficiency, it is based on how long it takes to heat the square metres of a room using gas; then, if you look at electric, it's based on the National Grid. So, it's based on assumptions overall; it's not based on the property specifically. An EPC is a rough guide; it's not a very accurate guide to properties, and it's giving you an indication of where the property is at the point the EPC is taken, and the EPC is valid for 10 years. So, it doesn't take into account if you've done alterations to the property. 

So, I think, going forward, if you're going to create another version of it, that would add confusion to the marketplace, because you've got the EPC, which is guidance, which is what the minimum level of energy efficiency standard is based on, and that's set out of the Department for Levelling up, Housing and Communities, which doesn't communicate with the Department for Business, Energy and Industrial Strategy on this. So, I think co-ordination on what you are going to actually going to measure things by, and have that across all tenures, would be helpful, but to have a different target in different tenures creates more confusion. And I think if we're trying to get to the same goal, having the same targets across all tenures makes it a lot easier, because properties can change tenure, very simply.

So, I think EPC is a rough guide that's got us to where we are; it doesn't necessarily mean that's the end product to get us to where we need to be. And I think an actual debate on that is needed, not just in Wales but UK wide, so we're all working from the same hymn sheet to get to where we would need to be. That's probably the most helpful place to be, rather than saying, 'Well, we'll do this for this tenure, that for that tenure, and this for this tenure.' That's not going to help anyone.

Can I just ask on that, and I know Timothy wants to come in? You said it lasts for 10 years, and properties buy and sell, sometimes over a very long period and sometimes in a very short period, so in terms of people being able to upgrade that for their own satisfaction, should there be a system in place that allows people to say, 'I've done x,y and z, I've got this EPC rating, but I know it no longer really says where my property is'?

I mean, an EPC is not expensive; it's about £40, so if you want—. I mean, I haven't done it to my property. I bought my property 18 months ago, I'd done alterations, but I haven't changed the EPC because I don't need to change the EPC, because it's only for my own gratification. So, I think it's understanding what is the behaviour of individuals, and I think it's understanding what you want EPC for and what it's going to be. I think, actually, the data on energy consumption in a property, which would be useful to have, and how energy is used would actually be of greater use than an EPC. I think an EPC is a crude document, but a useful document. Sorry.

Thank you.

Okay. Let Timothy come in.

Thank you. Yes, as Gavin's alluded to, the EPC is made up of standardised assumptions, so it's a best guesstimate, and I think in order to improve the accuracy, what about increasing the trigger points at which the upgrades to the property have to be reflected in the EPC, as Gavin's alluded to?It's valid for 10 years, however, on average, people move once every 23 years, so that data of EPC isn't being updated in real time, unless you've got the supply chain doing it or conscious consumers upgrading it. But, having said that, the EPC is a recognised brand. I think it is known to people, but what Gavin said is, 'What do you do with it, and do people really understand it?'

And, just finally, the last time we looked at this amongst our property agents across the UK, back in 2019, we asked them how often do potential buyers show an interest in the EPC or the EPC rating of the property, and 62 per cent said 'sometimes' and 35 per cent said 'never'. And then, how often does the EPC influence the offers buyers make on a property, and 71 per cent said 'never'. So, I think it goes back to that consumer demand, that consumer awareness. Because, I think, whilst energy efficiency is growing—and I'd probably see that these results have changed since 2019, with the way the climate change has evidently been on the agenda—the main determinants, certainly for moving home, are size, location and type of dwelling. So, we've got to break that issue as well, and I think the EPC can play a part in that, but it's a slow process.

Dan, I think, raised his hand as well. Do you want to come in, Dan?

Yes. Just a quick one—well, I hope to be quick. I think one of the things to know about the private rented sector is that turnover is higher than in the owner-occupied sector, so I think there are about 1.5 million new tenancies starting each year in England and Wales, whereas it's about 1 million sales. So, tenants are more likely—. Well, right now, tenants aren't necessarily likely to take an interest in the EPC. One thing that could improve the EPC is being clear that the estimated energy consumption, or estimated energy bill, actually reflects the current tariffs that exist and, obviously, this has become much more important over the past 12 months or so. Because if that EPC is much more directly relevant to someone's monthly outgoings, then it suddenly becomes more useful and may help to drive behaviour within the market.

Thank you, Dan.

I'm not going to ask the next one; it's been answered.

Okay, fine. There we are. Okay, let's move on to Delyth, then. Diolch yn fawr.

Diolch, Cadeirydd. Timothy, you were saying earlier that there is a real need to address barriers to consumer understanding, and I wanted to ask all of you on the panel about this need to tackle that lack of understanding about energy-efficiency technologies. Is that gap a barrier to progress?

I think engaging consumers is vitally important. We've got to change behaviour. As I said earlier, it's all right having these targets, but unless people buy into them, or the climate emergency as well, it's very difficult to see progress. I think, as a professional body, we're certainly engaging with our members. We've got a document with a 10-point plan for our letting agents to engage with their properties, to set out what does their portfolio look like for the next five, 10, 15 years, to have those conversations with landlords now to plan what are the quick wins that you can do, which I think was alluded to earlier, in the property, and about what funding is available as well. And, as an example, when land transaction tax was devolved to Wales, we engaged with the Welsh Revenue Authority and produced a very simple consumer leaflet that then agents and the wider sector could use to engage with people to understand the rules as to where their tax was going to go. So, I think we're willing to engage with agents who are on the front line in working with consumers. But, I also think that local authorities have a role to play as well. They're in a strong position to provide advice and guidance and know their local areas as well, and will have a better idea of their housing stock.

Okay. Gavin.

Just picking up on the final bit, I think there's a big gap in the planning system that needs to be addressed as well. I know it's always a horrible thing to bring up, planning, but people need to know what the plan for that area is going to be. Is the local authority looking at a district heating network? If so, when do I plug into it? If you're in a conservation area, what are the default plans allowed to change in that building type? So, if you've got a 1920s building, what windows are going to be accepted? What windows are not going to be accepted? Putting them out first gives people guidance on what's going to happen, and that's something we've been calling for. So, I think local authorities also have a role to play in the planning system in making it easier for people. I know there's a consultation about to start on heat pumps, because currently you've got a 3m rule in Wales, and that should be reduced. But, if it's a conservation area, should I put PV on? Will I need to submit a planning application to find out if it's going to be accepted in a conservation area? Well, that's not really helpful in this plan. So, actually, understanding what the targets are and understanding how the system can support people, that's for both landlords, tenants, home owners, everyone. What is that area going to be in 20 years' time? Local authorities all have these lovely local development plans, but let's actually have it in the planning system as well. How do you make the planning system as easy as possible for people to put low-carbon and zero-carbon technologies into their buildings, including windows, which are a challenge?

Yes. Okay. Delyth.

Thank you for that. So, two of you have mentioned some of the avenues that could be gone down to try to tackle people's understanding generally about not just the energy-efficiency measures, but how the system more generally works, how things all link in together. Do you think that there should be a centralised energy advisory service? If so, who would be the best placed organisation to be running that? What roles do Rent Smart Wales and the Welsh Government have in providing advice? What's the best way, especially in the here and now, to make sure that people are aware of what the context is of the decisions that they're making, and what support could be made available to them?

Let's ask Dan, first of all, then, from his perspective. I mean, you touched on this earlier, I know, but just to add to that.

For private renters, I think Rent Smart Wales has a unique position that ought to be used a lot more actively in terms of reaching tenants with awareness-raising, educational material, giving them resources on the website for when they're maybe checking to see if their landlord is compliant, and what else they need to know. So, to me, Rent Smart Wales is the obvious option.

Just on technology and consumer awareness, for private renters I think we should acknowledge that a lot of renters won't have much interaction with the latest technology. A lot of their concerns will be around prepayment meters. Not many private renters will have access to digital thermostats to help control how much heating they use. Smart meters as well, private renters are less likely to have those in their homes. There's potentially some confusion around how entitled they are to actually get one for themselves. So, those are all sorts of things that may be more important to talk to renters about, rather than the more state-of-the-art things.

Okay. Thank you, Dan. Gavin.

I think Rent Smart Wales has got a role to play, but I also think, fundamentally, the local authorities. They understand the local area. They're the planning authority. They're the people. You're all elected representatives; you know your area better than anyone in Welsh Government, with the greatest respect to Welsh Government. Actually, it's the local area that needs to know what's going on in an area. They decide the local plans, and they can actually give the guidance as to what's best in that area. And again, you're looking at a community area, not just, 'Well, this is the plan.' Actually, what's best for the community? Let it come from the community, how they want to see those communities develop, and actually have that plan. Councils have that obligation. Feed it into the plans and actually do it that way. I think that's a lot more coherent.

Yes, okay. Timothy.

Yes, just to say that centralised advice would be great, would be welcome, but everyone's got to use it and realise they've got a role to play: agents; I'd even think lenders; the local authorities, we've alluded to; central Government; but also about the energy companies as well. I think Dan has alluded to how, within the private rented sector, there's that split incentive, so the landlord owns the property, but the tenant engages, on the whole, with the energy company and pays the bills, so that is an obstacle or a hurdle that needs to be gotten around. But is there engagement there from the energy company to work with both tenant and landlord? If they engage with the tenant, that information has to be filtered to the landlord somehow. So, is there an obligation on the energy companies as well, within this?

Thank you all for that. Just finally from me, this is a related point, but it's slightly different. So, as well as improving people's understanding, that doesn't always necessarily, as you'll all know, result in people's behaviour actually changing, due to whether they've got trust in these measures, whether there's just this general buy-in. I appreciate this is a more difficult thing to answer, but is there anything that you think could be done to overcome that lack of trust?

I think it's a case of looking at who people trust. Everyone trusts different people, and it's getting that consistency of message across different agencies. I mean, if you're looking at Rent Smart Wales, NRLA, Propertymark, Generation Rent, Welsh Government, local government, banks, if they've all got a consistent message it will get through. I think where you end up is when you have inconsistent messaging or people going for one tech over a different tech because they've got favourability towards it. So, I think consistency of message. And I think that actually goes back right to the first question: if you've got a property passport, it tells you what you should be doing to your property, and then that feeds into, 'This is what we should be doing: x, y and z.' The local authority can say, 'These are the grants available, this is what we're doing, external wall insulation in these areas.' I think it's that consistency of message. I'm not disputing that this is complicated. It's just having that consistency, but you need to have a baseline from which to give everyone that confidence.

Okay, thank you. We're going to have to move on. Joyce, did you want to come in on this?

Very briefly. How are we going to get tenants aware of the energy efficiency offers that are out there? Bearing in mind, of course, what you've just said, people are very focused on poverty at the moment and how they're going to fill up their smart meter, rather than anything else. So, any advice?

Okay, specifically to Dan, that one, I think.

It is.

Yes, I think that's—. It's a challenge, and I suppose you would need to consider this in line with the other considerations around security of tenure, certainty about rents. That's an important thing to crack. But, yes, I think energy companies having a better understanding of which of their customers are private renters and providing tailored advice there, and I think through the benefits system as well. If you're on benefits, you're more likely to be eligible for grants, so that's another way to reach renters. And I echo the comments earlier about local authorities having a role as well. Local authorities are responsible for enforcing MEES, so having that understanding of where private rented stock, particularly poorly insulated private rented stock, is gives them—. Everyone's got a role to play in that. They've all got their unique insights. From a renter's perspective, hearing things from different sources is possibly more likely to push them into taking action themselves.

Yes, okay.

That's covered that. 

Yes, thank you very much. Janet, did you want to pick up on that question?

No.

No, you're happy. Okay, we'll move on to Huw, then. Thank you. 

I was just going to say, if I could, quickly—

Sorry, Timothy.

On that point, I think from a tenant's point of view, engage with your landlord and letting agent. We saw, through COVID, communications between all parties vastly improve and increase, so get those lines of communication open, have those conversations; that's key.

Okay, thank you. Huw.

Llyr, I wonder if I could just touch on that for a moment, if I've got time, because there is a really interesting dynamic here, and, once again, I refer for transparency reasons to my own register of interests. But there is a really interesting dynamic between landlords and tenants, when a landlord says to a tenant or a tenant says to a landlord, 'Look, there's some potential here to upgrade the property and to make improvements for the long term.' Every tenant is different, every landlord is different as well, but, I just wonder, from the landlords association perspective, how they see that playing out in individual discussions between landlords and tenants in a more regulated sector now, where tenants don't feel fearful that there is a different agenda going on when a landlord walks in and says, 'Hey, we're upgrading the property. It's not going to lead to increased rents, it's not going to lead to evictions, it's not going to lead to whatever, it's actually because I like you as a tenant and I want you to stay here long term, and I'm improving the property for you and for me as the landlord'? What's your take on that?

Thank you for the question, first. I think you start from the perspective—. I think it's something like 86 per cent of tenancies are constructive and they work together, and it's about how we tackle that 14 per cent. But, for the majority of landlords, they don't know the financial position of the tenants, and I think this is a big issue. I'm not proposing that landlords know if a tenant is in receipt of benefits, that's not a sensible solution to this, which is where the logical conclusion ends. I think it's about tenants and landlords having that communication. Most landlords and tenants do have that communication. The challenge is whether the tenants see themselves living there long term and, in the majority of cases, they don't; they see it as short term, 'I'm only living here for a couple of years.' They fix the energy within the first couple of days of moving in, and then they sort of forget about it. That's what the research has shown, whether it's from energy saving, et cetera. So, I think it's about what is the motivation to do things, and I think it's about, for the tenant, what they want to see done to the property.

Obviously, the majority of the property, whether it's the boiler or the windows, that's all governed by regulation. So, whether the boiler's working, whether the windows are there, insulation, you've got the housing health and safety rating system, which governs how the property is for health and safety. So, from that, you've got quite a strong foundation. I think the bit you're getting to is: where there's a grant available, how does the tenant explain that to a landlord? And I don't think it's working in Wales, if I'm honest. Nest and Arbed have not delivered that in the private rented sector. That's quite clear from their own statistics. I think it's about how that communication works and how you can improve that. What is that journey going to be?

Now, if the tenant says, 'I'm in receipt of x, I can get a boiler upgrade or I can get this for your property', most landlords will take that, generally speaking, but it's about that communication and whether the tenant's aware of it, because if a landlord says to a tenant, 'Are you in receipt of benefits?', that's quite a complicated and quite an aggressive conversation, and I don't think we should actually be advocating that. So, it's about how you communicate that, and I think that's a really difficult communication strategy and I think it's about how we broker that. I don't really know the answer to it, if I'm honest, but I think, on the whole, it's about understanding where the sector is and where it needs to go, and I think Rent Smart Wales has a role in this. It has to communicate with landlords, 'These grants are available if your tenant is of this type.' But, again, not everyone will know what type of tenant is in, or the financial position their tenant is in. So, it is incredibly difficult for that opening conversation. Then you've got the extra mix: you might have a letting agent, so you've got a three-party conversation, who isn't necessarily going the same way. Then you've got Rent Smart Wales, then you've got Arbed, then you've got—. All of a sudden, you've got five different people trying to have a conversation. That creates lots of different partners in this. I don't think it's impossible; I just think it's about communication at the beginning and how you communicate between the different parties.

Timothy wants to come in as well—briefly, I'm afraid.

I'm going to come in briefly just on awareness raising, and I know Janet Finch-Saunders raised in the previous session the UK Government's boiler upgrade scheme and awareness. We actually surveyed our members in England and Wales in July, and 48 per cent of Propertymark members were unaware of the scheme's existence. So, someone's got to be co-ordinating that information and pushing it out, and, if it's in the private rented sector, Rent Smart Wales could be the catalyst for that. But awareness is very low about the grants that are out there.

Okay, thank you. Back to Huw, then.

Thanks, Chair, and I didn't mean to divert from that territory, but I think there's some interesting stuff there when you add on to that the number of amateur landlords that we have out there. So, the Rent Smart Wales part of this paradigm, in terms of professionalisation and training and information, I think is key.

Let me just go on very briefly, then, to the optimised retrofit programme, because we're intrigued to know how much the private sector has been involved in looking at the next phase of the optimised retrofit programme and the application of that to the private rented sector, and, frankly, whether you think there are lessons from the first phase in the social housing sector that can be transferred to the private rented sector. So, what are your thoughts on that?

So, on ORP 2, I proposed, actually, I think something like £10 million was allocated to not just the private rented but owner-occupier sector as well, just on monitoring, but that was turned down by the Government to not take forward. So, it has been proposed that, actually—owner-occupier and PRS—there's monitoring to understand energy consumption and energy usage. When you look at ORP 1, I think you've got a situation of tenants not wanting data collection devices in their properties. That's an interesting development, and we need to understand how to get that overcome. So, when you've got tenants in the social sector not prepared to have the devices to monitor energy consumption, energy usage, well, how do we overcome that? That's a real basic understanding we need to overcome.

The second bit is: what is that trajectory for ORP? Because the idea is the social sector will then deliver this in the private sector—owner-occupier and PRS. But, are they looking at a whole house retrofit? Well, that's not how owner-occupiers and PRS look at how to do improvements in the property; they're incremental improvements over time. So, I think ORP has got some foundations, but I think where the foundations and the learning points are is more around tenant behaviour and accepting data monitoring, and I think that's quite impressive.

There's also quite a big learning curve coming back from the social landlords on the state of their properties. I think that was an interesting point to learn from, because where a property says it is to where it actually is are two different question marks. And I think that's a really important lesson to be learnt. I also think there's a lesson to be learnt in what is the end goal, because optimised retrofit is still step-and-repeat—doing projects that have already been done, so we know what the outcome's going to be. So, what's a new innovative approach? I heard this week about one property in Wrexham. I think they spent nearly £100,000 doing that. That's not going to be cost-effective across Wales. So, what is the price cap going to be for properties, because a lot of properties aren't going to be covered by those costs?

So, if you take ORP, it's got some very good lessons, and you take what else has happened in the United Kingdom—some of the retrofit work in Leeds, which is looking at about a £40,000 retrofit—when you start transferring those costs into the average cost of properties in some communities, that's not economically viable. So, what is the solution? I'm not proposing we knock down houses and rebuild them, but, for some properties, that could be the answer, but that's a very difficult conversation. So, I think ORP's a good starting point, with lots of lessons to be learned. It needs to be rolled out to the owner-occupier and PRS to understand the behavioural change, and it also needs to understand what those changes are going to look like within it. I know ORP 2 should be reporting, but it's been delayed, and, on ORP 3, I think they're putting the bids in now, and some of that is good be looking at owner-occupiers and PRS as well.

Can I just follow on from that and ask what your understanding is of the extent to which the private landlord sector will be involved in the next phases of the ORP? You picked up some good points that could be transferred across, some challenges as well, but are you directly now involved in the next phases?

On ORP, from what I understand, the social landlords will then be approaching private rented properties. It's not going to private rented properties or owner-occupier properties. It's the social landlords who are then approaching to deliver that. That could be their own private rented properties that they're renting out.

Okay, there we are. We're going to come to Joyce, and we'll have to conclude, I think, after this one. We may wish to write to you with a couple of other areas that we haven't managed to cover.

We've got three minutes, and my question is going to take longer, probably. [Laughter.] So, what are the range of finance options available currently to increase housing decarbonisation in the private sector, and we're clear it's decarbonisation? In your opinion, have they succeeded or failed to deliver meaningful progress?

There have been various products in the market. I think we are literally at a change in the marketplace. So, previously, interest rates were incredibly low, as we all know; they're now going up. So, the idea of a green mortgage was not really a viable option—0.1 per cent on a mortgage didn't make a difference. Now it can actually be a meaningful difference on your mortgage if you've got a higher EPC rating. So, I think that is there.

Part of it is the regulation is only an E at the moment. When it moves to a C, all the banking sector, as far as I'm aware, have got green products that they're willing to come out. They have loans that are available. The challenge is going to be in the able-to-pay and unable-to-pay, so those who have got an asset but have no disposable income—they're asset rich but cash poor. In the PRS, you've got those where the value of the works exceed the value of the property. I think that's a significant challenge. So, where you've got a mortgaged property and the works to it exceed what the value of the property is going to be, that creates stranded assets. I think this a real challenge around who's able to pay and who's not able to pay. This is partly where I think the development bank has a role to play in how they can actually bring finance to the sector, but there are some real challenges around it. It's not pleasant that interest rates have gone up. I think everyone's not happy with that, but it will allow green mortgage products to be a more viable option in the marketplace, because they can be significantly different. If you go back to the Green Deal, many, many years ago, the Green Deal interest rate then was 7 per cent, which is still higher than what you can get a commercial loan for today, and when you think interest rates have gone up dramatically in that timeline—

Sorry, I'll have to cut you off there. I'll come to Timothy, and then I'll come to Dan as well for any concluding remarks, not restricted to the question, necessarily.

A final point around funding, it needs to be tenure neutral and needs to focus on the worst areas. We talked about the equality or the increase in social rented property, but that, of course, had a significant amount of funding compared to the private rented sector over the years, but, fundamentally, owner-occupiers and the private rented sector need grants for the retrofit, they need contributions to the evaluation or interest-free loans, and they can be scaled towards the works that are needed. They're the things that are going to really entice and change consumer behaviour. We need that hard cash. 

Thank you, Timothy. Dan. 

I think one of the concerns we have about grants, assuming that they are rolled out sufficiently, is that, at the moment, just the scale of the programme needs to be increased to reach everyone, assuming that tenants do have the incentive to seek them out and apply for those grants. The concern we have is whether landlords will, basically, take their upgraded property and then put it on the market to sell, and, essentially, if they then evict the tenant in order to do so, that results in the landlord getting the benefits, which were ultimately means tested and should have been targeted at the tenant. So, working out how to make sure that the tenants themselves get the benefits is one of the challenges we see. Increasing MEES to band C could help drive behaviour in the rest of the market. What we might see is some landlords deciding that the cost of upgrading is too great, and then those properties might go into the owner-occupied sector, where the owner-occupier will have a direct incentive to do the works themselves. The Welsh Government should also consider whether there needs to be a programme of actually investing money to bring private rented properties into the social sector and retrofit or decarbonise them that way. There are some organisations looking at the potential for doing this, and I know that the Labour Party in England are talking about a shift in tenure as well, so that's potentially a big trend over the next few years. Particularly when we're seeing interest rates going up, landlords might, but for other reasons, decide that they're unprofitable and sell up. So, these are all trends that we need to consider. 

Yes, plenty for us to chew on there, as a committee, and throughout the last hour. The clock has beaten us, I'm afraid. So, thank you to our three witnesses, again, for another stimulating and interesting session. I have to tell everyone, you will be sent a copy of the transcript or a draft transcript to check for accuracy, to make sure that we don't put words in your mouth, and, with that, thank you so much for being with us.

The committee will now take a very short break, and we'll reconvene in time to go back into public session at 12:10. There we are—12:10. Diolch yn fawr. So, we'll break. Thank you.  

Thank you. Welcome. In terms of the Welsh Government's approach to decarbonising the private sector, do you believe a long-term national strategy for decarbonisation of housing in all tenures is essential to driving progress forward?

Who wants to go first? It's always—. Go on then, Andy. 

Yes. [Laughter.]

Great, a one-word answer—that's one thing you won't get from politicians very often, I tell you. Okay. Sam, did you want to add anything?

Yes, and expanding on what Andy said, effectively we're in a situation right now where we've got Net Zero Wales, which has set, really, the only ambitious target of net zero by 2050. Breaking that down into tenures, you've got the social housing sector, which is a lot more regulated and a lot more target driven; the PRS sector, again, you've got MEES within that, so a bit more targeted; owner-occupier, virtually nothing, apart from knowing that 2050 is your target.

We know that the UK Government is looking at certain legislation, particularly reform of mortgage lenders; you've got building regulations for new-build homes. But for the existing owner-occupier sector—we've got over 1 million properties in Wales that fall into that category—there is nothing between now and 2050, which represents 70 per cent of the housing market. So, there is certainly a need for a strategy—a strategy based on targets and regulation, I would stress.

We'll come to Gordon, then Andy wants to add something, and I'm sure David will have something to say as well.

I would agree, yes; we've long campaigned for a full strategy to be able to steer the industry. Without a strategy from legislation, yourselves, then it's not going to happen.

And do you believe that—

Go on, then. Yes, okay.

Do you believe that before the strategy—. It's a bit like the horse and the stable door. Do you believe that the strategy should come first or the assessments? We've been picking up earlier—how can you do a strategy if you don't do the assessment?

There is a bit of a chicken-and-egg aspect to that, but I think, unless the strategy is there, you're not going to actually make a start—the assessments then follow on, I'd say. So, the first point is to get to a strategy, to have a clear, defined target. Even if that target is not met at the end of it, at least we're starting to move. Actually sitting still for the next five, 10 years, I don't think is actually an option.

Okay. Andy.

Yes, I'll expand my 'yes' a little bit, if I may. So, absolutely, I agree that the need is, really, to have a long-term target that's cross-party, that's set somewhere in the future. I definitely agree that the point around strategy can come first. We don't necessarily have to iron out all of the edge cases in order to get the strategy in place. What that will do is fundamentally drive the market with things, such as I'm sure David will mention, around potential opportunities for tax differentials and so forth.

But unless you've got a very clear message that's tenure blind that all homes need to achieve net-zero carbon—preferably a relative not an absolute measure; you need to assess the capacity of each individual home to be able to get how far it can go, technically, rather than necessarily set an arbitrary absolute level—. If you can communicate that clearly across tenure types, then you'll drive the market behaviours, which, ultimately, is the biggest clear message you can send as Government.

And David.

Yes, I agree with what my colleagues have said. We know enough in the broadest sense to be able to set a really good strategy. We know this is a really complicated area. It requires a multi-year, probably a 10, 20-year, programme. So, yes, strategy is key. That then can get refined. Clearly data is important, but we know enough already to be able to get a really good, strong strategy and make a start.

Yes. That’s a pretty firm position, that. And then my next question: how should, or whether you believe the Welsh Government should adapt its approach towards ambitions for decarbonising the private housing sector in light of the energy-price and cost-of-living crisis? Because, of course, since we started out on this, some circumstances have changed.

Yes, Andy.

Yes, there is a well-received wisdom in retrofitting and decarbonisation that’s called 'fabric first'. I think it’s stuck because it’s catchy. There is an increasing dataset to challenge that, to say that actually it’s a more considered, balanced approach across fabric, technologies, renewables and so forth, and it needs to be assessed on a home-by-home basis. To give a bit of context, we’ve got in Sero just under 10,000 homes in the pipeline that we’re retrofitting and just under 4,000 that we’re working on new build. So, we’re doing this on the ground, and what we’re seeing from the data we get back is that a nuanced approach is important to tackle the energy crisis in the short term but remain on track for the longer term goal of decarbonisation. But that’s not taking a sidestep—it’s simply the sequencing that you do the measures for the home, and you can still keep your long-term strategy. If you’re measuring in carbon, and you’re measuring that through the smart meter, then you’re able to plot the journey for that home as far as it can reasonably go in relation to what’s technically appropriate for that individual home, and that allows you to take the first step as an energy crisis measure and subsequent steps as the remainder of the journey of how far that home can appropriately go towards net zero. And in many homes’ cases that will be net zero give or take, probably, about 50 kg.

David wants to come in, but we did grapple with this in a previous meeting, really, didn’t we, about fabric first versus technology. I know it isn’t polarised to that extent, but surely it stands to reason that you can kit it out with the best technology but, if it isn’t efficient, then really you’re wasting your money a little bit.

We can—. The data will speak here. So, ultimately, what we can evidence is that, if you want to help a resident in the energy crisis, the biggest impact you can make for the significant majority of homes is to swap their boiler out for a heat pump or to fit in a PV and battery system. There will be minority cases that need fabric improvements before those systems can make a meaningful contribution, but they are minority cases. This is on-the-ground evidence coming through, so—

I’m not questioning the evidence. It’s a bit counter intuitive; you know, you think—. It chimes with what the NEA was telling us—I think it was them, wasn’t it, about a fortnight ago. But, yes.

We’ve modelled it out and we've done numerous homes, so it is the case that it can do that. That’s not to say that we shouldn’t be doing fabric, but the extent of fabric and when in the sequence we do fabric is what we suggest needs a more nuanced approach. The mantra of doing the most expensive measure with the worst payback up front is not necessarily a winning solution.

When you frame it like that, it makes absolute sense, of course. I know David wants to come in, but, Jenny, do you just want to make a quick point?

The problem is it sounds simple to simply swap a boiler for a heat pump, but there are all sorts of other things that have to change as well, like the radiators may not be compatible with the heat pump, and therefore you’ve got to completely reorganise the way the house gets the heat from the boiler—the heat pump.

Yes, and that’s acknowledged, I suppose. When we say 'heat pump' it’s shorthand for whatever else needs to happen as part of that as well.

Yes, there is an engineering—. There is a slight risk of over-engineering with heat pump installs, in that the distribution system for the heat with a wet radiator system may be appropriate, but of course an installer is not going for risk going, 'Well, you could see whether it works and I’ll come back if you need an extra radiator swapped.' They’re going to say, 'Do the whole thing.' But, ultimately, yes, some distribution systems will need swapping out.

Okay. Right. Thank you. I’ve got David, then Sam, and then Gordon as well coming in on that. David.

Thank you. Yes, I think that reflecting the energy bill crisis we’ve got isn’t inconsistent with a strategy. The problem is this is a long-term programme. There is a limit to how many homes you can address very quickly. And so, definitely, there needs to be a focus on how do you help those that are in most trouble, most difficulty, quickly. But the reality is you are not going to get to most people in a very short period of time, so you need a strategy that takes a longer term view whilst you have a little bit of a sprint to help people out immediately. The energy bills being so high—and don't take this the wrong way—means those that can afford to pay them have a greater attention to the fact that energy efficiency is important. That is quite a change. But one might reasonably expect those energy bills to fall in two or three years' time, and, unfortunately, people may start to get used again to very low energy costs, which were always inconsistent with a net-zero trajectory. So, your long-term strategy probably doesn't change, but, yes, you'll want some short-term actions to help those most in need now. 

Thank you, David. Sam. 

Yes, it's really interesting. During the summer, RICS commissioned polling with YouGov. We wanted to see how the cost of living and the energy crisis have really affected people's mindset and behaviour towards energy efficiency and retrofitting. I think we reached out to about 2,500 actual home owners to speak to, and the findings were quite eye-opening, that around 50 per cent of them would be willing to spend up to £5,000 of their own savings today on retrofit work, as long as it had a positive impact on their energy bills. The other 50 per cent would also consider it if there was a value uplift in their property. I know we'll talk about the financing element later on, but that was some of the interesting feedback we had there. The current energy crisis is driving that message home. 

Now, one of the challenges, as David alluded to, is we are in a situation today where the high price of energy means that the payback time on a lot of the retrofit measures you install is relatively short, or shorter than it has been. That will obviously change. And to think that, on a national level as well, we're talking about some of the energy crisis we're in, and, when we're considering the challenges the Ukrainian war has thrown up as well, actually, retrofitting can provide an element of energy security as well, so we're not heavily reliant on fossil fuels that come from abroad. There is a broader security element that we can look at. 

That research you mentioned on affordability—it would be really interesting if you could send us any additional information. 

Yes, of course.

That would be good. Gordon. 

I just want to expand a little bit on Andy's comments. I'm a great believer that it's got to be retrofit ready. The aspect of fabric first is maybe too far a step, but actually making sure that gutters and pointing and the obvious things are sorted first, and then go into the technology and all the rest of it—just a point there. And also I think the figures for the Welsh industry, construction industry—it's about 90 per cent small and medium-sized enterprises. Well, that would be quite good for the local economy and all the rest, and you can effectively kill two birds with one stone, insomuch as, if you implement this correctly, then it should actually bring greater benefits to the local environment as well. 

Yes, and that brings us to the whole skills agenda then, as well, which is a big one, really, isn't it? Okay, thank you so much. I think we'll move on now then to Huw. 

Thanks, Chair. We've heard different views from people giving evidence to this committee over the last few weeks about the extent to which the gaps in private housing sector data are a barrier to actually taking forward decarbonisation. If I put it at the extremes, we've heard views saying we need almost what I'd refer to a Doomsday Book approach, where we need to map every single property before we can meaningfully move ahead. Others say, well, no, you shouldn't use that as an impediment—you just need to get on house by house. What's your view? Is this a real barrier, or should we just get on with it step by step, house by house, as we can? 

Sam, and then I think Gordon touched on this earlier a little bit. Yes, Sam. 

Quite simply, when we look at the data and this whole-house survey approach, there are two elements to consider: (1) the actual advice a homeowner is getting. A whole-home survey will show you what needs to happen and, importantly, how and when it needs to happen and in the right order. I know we talked about heat pumps just then. That's a great example: are the radiators suitable? A whole-home assessment will show that. Actually, it's not a new concept in Wales; with the Warm Homes fund before, to be eligible for a heat pump, you needed a retrofit assessment, and it needed to show that a heat pump was suitable to be installed in that home at that time. So, there is a consumer awareness, consumer information piece, for Government as well. I know the future generations commissioner, for example, has pulled out £14 billion or so as what is needed in the next few years for retrofitting. But, actually, do we know where that funding should be targeted? Is it targeted at specific tenures, specific communities, specific technologies as well? That's where a lot of this data can help direct resource, and that alone could then help things like the wider supply chain upskill, knowing that the data is showing that X amount of homes will need this one type of technology. It's about giving that mark of confidence as well, which is what that data would do. 

I've always believed in the maxim that if you can't measure it, you can't manage it, and if we don't actually know what we've got, then we can't do it. That data set I think would be useful. I think reviewing everything is almost impossible and gives people a way of rolling it down the road and just not bothering with it. There are certain things that we know we need to do now and can get on with doing. I'm on the board of a housing association, and we have gone for the simple elements of putting PV and batteries in, because it's one of the requirements; I think that's huge. But you've got to make sure that you're measuring it holistically. I think there's a question later on about use of local authorities—I think Wales is very geographically and aesthetically diverse in what type of buildings we have, and I think we've got to utilise local authorities, although they're under-resourced and all the rest of it. It's making sure that that resource is actually put in to ensure that the answer in Cardiff isn't the same one as you'll have in Newtown or Powys or anywhere else. So, we do need to make sure that we're doing it right. And picking up on Sam's point just very quickly, if the industry knows that there's £14 billion worth of work to come up, then that's the way that the SMEs will start training up people, because they understand that, if they take on two apprentices, they're actually going to have work for them for the next 10 years. Because a lot of these companies are one, two, three people. They would like to grow, but they don't want to do that and then get rid of people in two years' time when the green energy fund has disappeared, or whatever the solution is.

Yes, quite. Thank you. Andy.

Thank you. On the issue of data, I wouldn't define it as a barrier that prevents work being able to progress, but it's absolutely at the heart of getting this done right and in the most cost-effective way. The first step I would very much encourage Welsh Government to act on is to connect to the Data Communications Company and get smart meter readings for public benefit, for the Government to be able to understand the actual carbon footprint of 1.4 million homes in Wales, along with the other buildings along the way. From that point, you can start to create effectively what the industry terms as a 'building passport' for each building. That may only be a couple of points of data at the start, but you've got 1.4 million unique entities, which represent each home. As those homes can be progressed, you can then build additional layers of data into those individual data sets. So, you start to say, 'Okay, what type of home is it? It's a terraced house' or 'We can start to do that, it's a flat.' You can start to accumulate additional pieces of data.

That data needs to have longevity, so it needs to tackle the barriers between property and personal data, because the records must migrate over the point of sale, otherwise you're not jumping tenures and you're not jumping ownerships. But with that holdings platform that allows you to have data passports for each home, you've got somewhere to put the 'medium-term retrofit plan', as PAS 2035 would call it, or the 'pathway to zero', as we would call it. That gives you a means to allow that home to have its journey, and in doing so, you provide the private sector, both rental landlords and private owner-occupiers, with the ability to look at that at the point of purchase and say, 'I can see, in your pathway for this home, that there is a heat pump in its future and some loft insulation and a new hot water tank.' That encourages what we see from the VALUER project research we did with Sam and others, to start to behave the brown discount behaviours. So, they will start to chip, because they know there are measures that are in the future of that home that are required. But that all stems back to that data source and that golden thread of data, if you will.

Briefly, Sam, and then we'll come back to Huw.

Just quickly to expand on the passport element, Andy has demonstrated well the technical benefits of it from a decarb point, but I just want to add that there are wider benefits as well. We're looking at building safety with the Welsh Government right now, and the role passports can play in that, because when we're talking about removing cladding off a building, it's a great opportunity to put insulation on at the exact same time. So, it's about having that holistic approach, futureproofing. Passports have a lot more benefits as well. We've done a lot of work with the EU, and it helps with things like improving the home buying process. It can really shrink the time between an offer and completion to three or four weeks, rather than three months. So, there are a lot of other benefits that a passport offers, but I think the environmental and energy side is probably the strongest case for it.

Thank you. David, and then we'll come back to Huw.

Very briefly, I think, answering your question, data is important but you don't have to wait for it to get started. This is concurrent. You can do this concurrently and use data to optimise. So, in answer to your question, don't wait for the data—we don't have that luxury.

Thank you all very much. You've helpfully pointed the way already on how we could do a programme of whole-house assessments, but without asking you all to step in again, are there any other significant barriers to having a programme of a roll-out of building renovation passports that you can see that haven't been mentioned already, and how would we overcome those?

I touched on that piece of work that RICS are part of, the British standard 40104. It's called 'Assessment of dwellings for retrofit'. When we talk about the development of passports and the whole-home survey, the big challenge we've got to date is that there is no consistent approach. There is no professional standard. There is no level of professional competency. There's very little independence, as well, in actually who undertakes this work. It could be a person who works purely for a solar panel company. They, quite rightly, probably wouldn't want to look at the wider implications. So, RICS are part of this British standard, which hopefully in the next couple of months will be published, which really sets, I guess, the bare minimum of what to expect from a retrofit assessment. And off the back of that, that will help with the level of competence the assessor will be expected to undertake. It helps provide a level of independence as well, which I think is a challenge, because you do want to have a holistic approach to make sure the right measures are installed at the right time, at the most cost-effective moment as well. So, that standardised approach is something that is missing, and we are hoping to fill that gap.