Landlords will collectively have to spend more than £20 billion making improvements to their rental properties to meet proposed new energy efficiency standards, according to some estimates.
The government put out a press release on 7 February announcing its plans to improve the tenants’ lot: “Warm homes and cheaper bills as government accelerates Plan for Change”.
The government is busy considering rule changes on how minimum energy efficiency standards or MEES are to be applied to rental properties in the future. There’s an ongoing consultation exercise to help decide what changes are needed: “Improving the energy performance of privately rented homes in England and Wales” concluding 2 May 2025. Landlords and all interested parties are encouraged to respond using the online survey
The Government’s proposal is that all rentals will need an EPC rating of “C” by 2030, and all new tenancies will need to meet the standard by 2028. Failure to comply will mean a £30,000 fine per property.
What complicates matters somewhat is the current EPC rating of “C” may not be the same “C” rating after some time in 2026. It’s been recognised that the current method of assessment is unreliable. Based on a narrow range of metrics, the principle metric being energy cost as opposed to energy (carbon) efficiency, it is measuring the wrong thing, and a number of assessor measurement assumptions means the grading can vary between assessors, and buildings.
The Government wants to improve the reliability and validity of the assessment process used to determine EPC ratings for buildings, so it’s developing a much more rigorous assessment process. Unfortunately for landlords this will increase the cost of assessments.
Another ongoing consultation is the Reforms to the Energy Performance of Buildings regime which consults landlords and other interested parties about the new methodology. It will consider a range of new measurements including:
This consultation is scheduled to last for 12 weeks from 4 December 2024 to 26 February 2025.
It is likely the Government will require assessments to be carried out more frequently than the present 10-year intervals, most likely this will be set at every 5 years. It is also likely that the more rigorous assessment process carried out more frequently will result in landlords paying considerably more for the checks in the future.
As these consultations are ongoing there could yet be changes to the Government’s requirements for EPC ratings but as things stand, all existing tenanted properties should be upgraded to a minimum EPC grade C by 2030 and for new rentals to be upgraded to grade C by 2028.
As most of the required changes are fairly predictable such as insulation, draft proofing, insulation and heating systems, landlords with properties below grade C should consider making a start upgrading as soon as possible to spread the cost.
Experience has shown that the current algorithmic method of arriving at a reliable and valid EPC rating estimate is an inadequate measure of the true energy efficiency of a building.
To improve this, it is likely the rating system will move from a single measure of a building’s performance to several metrics covering the different elements of energy efficiency:
At this time, it is unclear how the scores on each of these metrics will combine to meet the updated Minimum Energy Efficiency Standards (MEES) and any future Decent Homes Standard to be introduced through the Renters’ Rights Bill.
By replacing the current Standard Assessment Procedure (SAP) with a more rigorous Home Energy Model (HEM) the Government argues it will be more transparent and will provide a more accurate representation of a building’s carbon efficiency.
These changes will require more assessor training to improve the validity and reliability of a building’s ratings, along with possible sanctions for poor assessment practices. There will also be harsher financial penalties for landlords who fail to comply with the regulations.
Perhaps the most challenging and expensive elements of the proposals will be insulating homes with older types of construction and upgrading the heating system.
Aiming to encourage the adoption of low-carbon heating solutions, the Government proposes ranking different heating systems with fossil fuel heating systems at the bottom of the ranking, and heat pumps at the top.
This could potentially lead to higher running costs for tenants. More efficient gas boilers can be cheaper to run than some heat pumps, reducing fuel costs for tenants. Oil and LPG boilers which are currently penalised should come up in their ratings.
EPCs are valid for 10 years at present. But the government proposes to reduce this, as it says, to improve the accuracy and timeliness of energy performance information for properties. It will also mitigate against landlords having a new 10-year assessment done immediately prior to the implementation of the introduction of the grade C requirement.
A 5-year interval has been suggested but the consultation process includes a range of validity periods, even as short as two years between assessments. This seems a bit of a stretch especially considering the extra cost of a more detailed assessment.
It has been suggested by government that its “preference is to allow all existing EPCs to remain valid until the end of their existing validity period and apply any new validity period to new EPCs”, but other options are under consideration which would include invalidating existing 10-year EPCs or allowing a transition period before they are invalidated. Currently, a landlord is not required to replace an EPC if the same tenancy continues after the EPC expires. This practice is likely to end.
There are plans to extend the EPC requirements to cover all houses in multiple occupation (HMOs), holiday lets, and listed buildings. Currently, there are exemptions for some of these. The current rule for HMOs states that an EPC is only required if the HMOs is let on a joint tenancy, not for individual room or bed sit lets. There have also been exemptions for flats in high rise blocks where the freeholder has control of many aspects such as wall insulation and heating.
A 24-month transition period is proposed for HMO landlords to comply with the new requirements.
There will be a cost cap of £15,000 beyond which, if a property still does not comply landlords will have up to 10 years exempt. This would only apply after the new rules come into force and landlords will need to apply.
The new EPC standards are expected to be introduced in the second half of 2026, which will be followed by a transition period for the introduction of the Home Energy Model for domestic buildings, which will incorporate the new EPC methodology being developed in 2025.
The government says it cannot determine yet which metrics may be used for individual future policies, regulations or schemes. “That will be a matter for the design of those policies which will be subject to their own consultations. However, the government does not want changes to metrics to penalise duty holders who may have taken action to bring themselves into compliance with future targets or to affect existing compliance.”
When the new version of the calculation methodology is introduced, all new EPCs will be produced using that new version, including the new metrics. Existing EPCs will continue to display the old metrics. Changes to the metrics will not invalidate existing EPCs, so existing EPCs could still be used to demonstrate compliance with existing regulatory requirements for the period of their validity. This will mean that there will be a progression over time to the new metrics as EPCs using old metrics reach the end of their validity period.
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