The taming of the masculine pioneers: changing attitudes towards energy efficiency in

the New Zealand PRS

Aimee Ambrose

My interests

• Background in Planning...people and the BE

• Sustainable housing and how we can drive up standards of energy performance

• New and existing stock...

• The 'PRS problem'

• IEA: changing behaviour....

The PRS: an international problem

• International problem: PRS provides some of the poorest quality least energy efficient dwellings in UK, USA, Australia and NZ, amongst others.

• Consequences for HWB and prosperity

• Landlords largely outside of regulation and hard to influence.

• Huge reliance on the sector to provide housing...

Hugely under-researched...

Definitions

Energy efficiency: achieving the same outcome for less energy

In terms of housing, we need to be achieving more for the same or

less...

Warmer homes v. more energy efficient homesWe need both!

The journey to NZ

The journey to NZ

• Rotherham 2012: Green Deal research

• framework for understanding how landlords approach decisions about EE investment

• Increasing interest in poor conditions in Dunedin, NZ: Visiting Fellowship

• February-March 2015

30 in-depth interviews with many different landlords,

letting agents and local stakeholders (and some

participant observation...)

Dunedin

• Pop 127,500• 25,000 students• NZs oldest city • Heritage town• White European pop• HE main industry• Oceanic climate

Why Dunedin?

• Worst case scenario?

• Extreme poor EP within developed world

• Notorious for the coldest and poorest quality rental accommodation in NZ

• Old housing: 86% pre-1977

• Low expectations re: warmth and comfort

Why Dunedin?Temperatures 'colder than the fridge' (2c) in early morning... (Robertson and Norton, 2009)

Baby, it's cold...inside!• Shannon et al (2003): • Cold homes: 100% households

living in thermal conditions below 16c

• Low expectations:100% expected indoor temps to fall below 15c in winter

• 50% think heating adequate.

• 36% in fuel poverty v. 14% nationally (Lloyd, 2006)

Good time to be a landlord...• 30% rental housing (UK 16.5%)

• Growing demand+ low house prices+ low interest rates= higher than average rental yields (6-12% v 4.9% NZ average)

Bad time to be a tenant...

• Povey and Harris (2004; 2013):

• 60% lower end rental properties old (pre-1941), poorly constructed, not weather tight and poorly maintained.

• 57% need urgent repair.

Poor construction + low insulation + outdated heating systems =

NZs coldest homes!

NZ Homes: why so cold?

Insufficient to maintain indoor temps within WHO's thresholds (16-21c)

The NZ house• Wooden construction • No cavity• No gas• Single glazing• One heat source

The research...

• The need to improve conditions in NZ's PRS is URGENT, as it becomes a long term destination

• To convince them to improve, we need to understand landlords better...

• Should we use carrots or sticks?

• How would legislation be received?

The research...

• Aims: – add depth and detail to our

understanding of dynamics of energy inefficiency in the PRS through qualitative research

– better understand what motivates and deters landlords from acting on EE and where it fits within their business models

– test the resonance of the principal-agent thesis

The principal-agent thesis

• Adapted to explain landlords' aversion to investment in thermal and energy performance and the 'EE gap'...

Tenants (principals) are poorly informed about EE and unlikely to pay a premium for it. Knowing this, the landlord (agent) is unwilling to invest in EE as they will not recoup the cost.

The principal-agent thesis

• Oversimplifies and assumes complete economic rationality (IEA, 2007)...

• Paints tenants as ignorant and impotent despite heterogeneity

• Instead we need to understand specific contexts and develop bespoke responses.

The existing evidence (NZ)

• Saville-Smith and Fraser, (2004):

– the prevalence of non-professional, small-scale investors

– not financially prepared for routine maintenance

– who view their properties as "vehicles for passive investment and capital gain".

The existing evidence (NZ)

• Focus of research on health consequences of cold homes... (Howden-Chapman et al)

• ..and the 'culture' of under-heating and acceptance of cold homes...

• ...something attributed to the country's colonial 'masculine pioneer identity' (Cupples et al 2007)

• ..remains an obstacle to change.

Findings...

• Most landlords positive about improving thermal performance and EE

• and many taking action...

Surprising!

Types of landlord

Non-joiners•Provide accommodation to students and/or low income groups•Little or no interest in EE•Aim to keep capital expenditure to a minimum. •Feel they are meeting a need for low cost accommodation.

Passive actors

•Provide accommodation to students and low income groups•Have some interest in EE but are passive in pursuit of it•Believe they will not recoup costs of significant investments

Active

•Let to a variety of tenants•Accept the need for EE and provide basic measures•Feel that tenants expect insulation and an affordable heat source, as standard•Feel they can charge a small premium for a property with these features of around £5 p/w•More innovative measures such as micro renewables are ruled out on cost grounds and are not felt to be expected by tenants.

Pro-active•Let to a variety of tenants but tend to avoid low income groups and younger students.•Very interested in and accepting of the benefits of a wider range of EE measures•Will include a wider range of EE measures when renovating a property including ASHP, MHV and double glazing in addition to high levels of insulation.

Why are landlords more active?• Shift in the attitudes over 3-5 year

period, driven by pressure from tenants

• Tolerance of cold homes waning...not 'masculine pioneers' anymore?

• Tenants now regard basic insulation and an ASHP as essential

• Recognising the connections between EE measures and a warmer home.

Why are landlords more active?• Ignorant and disempowered?

"We didn't put a heat pump in one of the properties because they didn't complain so we left them to it. Although most tenants expect it now and some recently said they wouldn't sign the lease if we didn't agree to put a heat pump in." Landlord, 4 properties

"One of the first questions prospective tenants now ask is whether it's insulated and has it got a heat pump."Landlord, 50+ properties

Why are landlords more active?

• However, 'tick box' approach unlikely to yield substantial gains in warmth... and cost more.

Why are tenants more aware?

• Increased media coverage...

• Cold homes a media preoccupation locally since death of a toddler

• University Students' Union campaigns incl. Rate my Flat and 'Otago Scarfies'

• Warm Up NZ!

• Rising electricity prices

Killer houses!

Will tenants pay more for a warmer home?

"I never noticed it was cold in there, I’ve used the fire a few times and it worked really well but they found it cold and weren't happy, so I said ‘I’ll put a heat pump in’ cos hopefully they’ll be long term tenants. So we had a discussion over how much the rent would need to go up by […].I gave them a good deal and put their rent up $10 a week just for the capital. It will take about six years to pay off." Landlord, 3 properties

Low income tenants

BUT...•consumer pressure not felt as strongly by landlords of low income tenants •stand to gain the most from warmer homes •preserve of 'non-joiners' and 'passive actors'•providing a 'service' of low cost homes

Policies and regulation

• Minimum quality standards not as unpalatable as assumed...

• 1/30 would exit the market

• Majority felt it would create a 'level playing field'...

• ...paying less for sub-standard properties

• BUT rent rises inevitable.

"There would be winners and losers and the loser isn't necessarily the landlord. It'll be the tenants that pay." Landlord, 30properties

The Residential Tenancies Act....From 2019, all private rental properties

must have both floor and ceiling insulation.

What we now know...

Rising electricity prices

Media activity/local activism

Understanding NZ in a global context?

But reflects extent of consumer

expectations

Endorses IEA's view that institutional support, price and pubic awareness drive change

Beyond principal-agent?

• Some types of landlord conform to this but it is not universally applicable...

• needs to recognise heterogeneity...• reveals consumers (principals) as

potentially powerful, not impotent and ignorant...

• ...even when market conditions weaken their position

• EE may still be poorly understood but warmer homes, affordable to heat are not

• some tenants will pay more.

Concluding thoughts...

• For further progress, (technical) knowledge needs to improve (tenants and landlords)

• Socio-cultural movements can disrupt rigid economic rationales

• ..and cultural norms• If trend continues, EE measures will have to

form part of the business models...and they will pay less for properties.

• Winners and losers...low income tenants• Detailed research in Dunedin produced different

results...• the operation of the PRS must be understood

within context

What next?