Energy Performance Rules for Rented Properties: Latest Developments
Proposals to tighten up on energy performance standards in rental properties are nothing new. But here we will look at the government’s latest proposals to raise the minimum EPC band for rented homes, and at how it might affect landlords.
The energy performance of rented properties – the story so far
Debate on the energy efficiency of property in the UK, whether owner occupied or rented, has been going on for some time. The UK is said to have some of the oldest housing stock in Europe, and potentially therefore some of the most energy inefficient. There has long been concern over the way this contributes to climate change. The soaring cost of energy in recent years has added to calls to take action.
But progress on lifting energy performance standards in the PRS has been slow. In 2018 the Minimum Energy Efficiency Standard (MEES) was tightened so that properties may only be let if they have an Energy Performance Certificate (EPC) rating of band E or better (unless exempt).
In 2020 the last Conservative government proposed reducing the minimum standard to band C by as soon as 2025. This target was pushed back and ultimately abandoned. (Although not before some landlords had already undertaken work or made plans to meet the new standard.)
What is happening now?
In 2025 the new Labour government has taken up the baton on energy efficiency in the PRS with a set of new proposals. Broadly, they intend to raise the MEES for PRS properties to EPC band C by 2030. (Or 2028 for new tenancies.)
This proposal works towards the objectives of the Warm Homes Plan announced in Labour’s election manifesto.
At the beginning of February the Department for Energy Security and Net Zeo (DESNZ) launched a consultation titled: Improving the energy performance of privately rented homes: 2025 update This consultation covers England and Wales.
The purpose of the proposals, according to the government, are: ‘to ensure government’s proposals for introducing higher MEES for privately rented homes are up-to-date and account for the current and future energy efficiency and heat decarbonisation landscape’.
The add that the aim is to: ‘make homes easier to heat, tackling fuel poverty and lowering carbon emissions.’ They say that people living in the PRS have the highest levels of fuel poverty compared to other tenures.
One very important point to note is that raising the minimum EPC standard in the PRS is likely to be done alongside changes to the way EPCs are assessed. So in practice not only will the minimum standard increase but the way the minimum standard is assessed will too.
More details on the proposed EPC reforms can be found in the consultation on Reforms to the Energy Performance of Buildings Regime This was published in December 2024 and closes on 26 February 2025. If they proceed it is planned that these changes will come into place in 2026.
The proposals for raising energy efficiency standards in the PRS
The proposals very much take those made by the last government in 2020 and build on them. The executive summary to the consultation outlines what is being proposed, as follows:
There will be a new minimum energy efficiency standard for PRS properties of EPC band C.
The new system will assess the energy performance of buildings based on what is called ‘fabric performance, smart readiness, and the efficiency and emissions of the heating system’.
The consultation says that the government’s ‘preferred approach’ is to require landlords to prioritise meeting a fabric performance standard that is similar to today’s EPC C standard. Then meet an additional standard for the heating system and for smart readiness.
They say this will make homes warmer, save tenants money and encourage the ‘decarbonisation of heating’. They say that this would require landlords to install measures to improve a property’s heat insulation, reduce the energy used for heating and allow tenants to optimise their energy use.
The government is proposing that there will be a so-called ‘cost cap’ – a maximum amount landlords will be expected to spend to upgrade their properties – of £15,000. After this they could apply to register an exemption permitting them to continue to let a property which is not compliant for up to 10 years at the most.
Government modelling suggests that it will cost between £6,100 and £6,800 on average to meet the new standard as set by the new system for calculating EPC ratings.
The consultation is proposing that the new standards would apply to new tenancies as from 2028 and to all tenancies from 2030.
The consultation is proposing that properties which currently have an EPC band of C (or better) under the current EPC system will be considered compliant with the new rules until their EPC expires. (Currently EPCs last for 10 years.)
Once the proposed EPC reforms come into effect, properties with a worse EPC than band C would need to get a new EPC before any work to upgrade them to band C or higher is carried out. (The proposals say this is to ensure that landlords are installing the correct upgrades.)
The consultation is looking at whether to introduce what is called an ‘affordability exemption’ – and how this might work. This would lower the cost cap to £10,000 for some types of property.
The consultation is looking at whether short term lets should be included in the EPC rules.
The consultation is looking at whether regulations should be made to ‘drive’ the introduction of smart meters in PRS homes.
The consultation is seeking views on what ‘exemptions regime’ there should be for the new minimum energy efficiency standards.
If implemented the new rules on energy efficiency in the PRS will be made by amending the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and the Energy Act 2011.
Some thoughts on the proposals
Firstly, it is important to note that these proposals are just proposals, out for consultation. However, given the current government’s majority and remaining time in office it seems very likely that they will proceed.
In the statements made by politicians surrounding this consultation much is made of their desire to help tenants. For example, Miatta Fahnbulleh MP, Minister for Energy Consumers says: ‘Everyone deserves the security and comfort of a safe, warm home.’
This is an admirable sentiment. But, this is a very thorny problem and much more complex than just making homes warmer.
All good landlords would agree that their properties should be energy efficient and well insulated – not only to provide tenants with a comfortable environment but to benefit tenants’ budgets. And landlords stand to benefit too. High quality properties are likely to be more lettable, suffer from fewer maintenance issues and maintain their value into the future better.
However, a huge amount of work is likely to be involved to meet these new standards. Estimates suggest there are 4.9m PRS properties in England and around 2.58m do not currently meet an EPC standard of at least band C.
The estimated costs of completing this work of between £6,100 and £6,800 on average per property according to government figures seem unrealistically low.
Landlords’ thoughts around installing energy efficiency measures are often that, while bill savings accrue to the tenant, the immediate costs fall on the landlord. Yet ultimately of course the costs of running a rental property are paid for by the tenant via their rent. The consultation claims the new standards will save tenants £240 per year on energy costs. That does not seem to be all that good value for money based on a potential maximum £15,000 investment in the property.
What might these new minimum standards mean from a housing enforcement point of view? Potentially there could be positives. The Renters’ Rights Bill proposes the introduction of the Decent Homes Standard and Awaab’s Law, requiring timely action on damp and mould, to the PRS. More energy efficient properties should, potentially, have fewer issues and fewer complaints. However, the new EPC requirements are likely to prove a challenge to many landlords. And they could make the enforcement of housing standards more complex.
Lastly, a reminder that as this is just a consultation the final format of the new minimum standards is not entirely clear as yet. However, landlords should certainly keep an eye on how they progress and what impact this will have on their properties as we get closer to the planned introduction date.
More information
The consultation runs until May 2, 2025. You can read it in full, and find out how to contribute to it if you wish, here: Improving the energy performance of privately rented homes: 2025 update
