How EPC rules are changing for landlords and what you need to do
The UK rental market could be facing a seismic shift in the next few years, with the government set to introduce stricter energy efficiency standards for rental properties.
This could significantly affect landlords, who, as it stands, will need to ensure their properties meet new minimum Energy Performance Certificate (EPC) requirements by 2030.
While this deadline could still change, preparing your rental property to be more energy-efficient may offer more benefits than you think. In fact, improving the energy efficiency of your property could lead to greater tenant satisfaction and a more marketable property. After all, according to the House of Commons Library, the cost of energy rapidly increased following the pandemic and has still not returned to “pre-crisis” levels.
It’s important to keep in mind, however, that retrofitting a property can come at a cost.
Here’s what you need to know about the changing EPC rules and what to consider if you need to pay for them.
New energy performance requirements ask for a “C” minimum by 2030
Though Labour announced last year that all rentals must achieve a minimum EPC rating of “C” by 2030, this is not the first time that property investors have faced a deadline.
Here’s how EPC rules have changed over the years:
In 2018, all new tenancies required a minimum EPC of “E”, and this rule still applies today.
In December 2020, the government asked that all new tenancies meet a minimum of “C” by 2025, with existing tenancies matching this by 2028.
In March 2023, the government extended the minimum EPC deadline for new tenancies to 2028.
In September 2023, the government scrapped all proposed EPC regulations.
In September 2024, Labour confirmed new EPC requirements but with an extended deadline of 2030.
In 2023, the Social Market Foundation (SMF) noted that private sector landlords were largely supportive of the need for higher minimum EPC ratings. In fact, only 11% of landlords were opposed to an increase. This research came out after the government scrapped its existing EPC plans in 2023.
Any concerns, SMF states, come more from the frustration of moving goalposts, with landlords expressing concern over spending large sums of money to renovate only to find that it wasn’t necessary.
As it stands, the private rental sector fares worse than housing associations when it comes to energy performance. Data from the UK government states that 72% of housing association dwellings were in “A” to “C” EPC bands, while only 45% of privately rented homes could say the same.
Studies show that tenants favour energy-efficient homes, making your property more marketable
Research presented by BTR News (BTR) notes that 83% of renters view energy efficiency as a top priority, with more than 40% claiming they would pay extra for the benefit.
Plus, a study from E3G states that fuel poverty for owner-occupiers has reduced by 35% since 2010. This number increased to 54% for social housing tenants. Yet, for private renters, that figure sits at just 4%. This highlights both the desire and the need for more energy-efficient homes.
This interest in energy efficiency isn’t a phenomenon that lies with just one demographic or generation. BTR News also states that close to 64% of 18 - to 24-year-olds believe sustainable property features are important. That number climbs to just past 86% for those aged over 65.
There are likely a few reasons for this. Not only do energy-efficient homes appeal to environmental mindsets, but they can also help:
Lower energy bills
Enhance tenant comfort
Increase property marketability
Lower maintenance costs
Increase overall tenant satisfaction.
While the tightening of EPC regulations may seem like a headache, investing in energy efficiency could offer long-term benefits.
There are several ways that you could improve your rental home’s energy efficiency, and getting an EPC report done before any renovations could help outline which areas need the most attention. Some areas to consider could include improving the property’s insulation, upgrading heating systems, and replacing leaky windows and doors.
3 ways to fund renovations and energy performance improvements
Improving your property’s energy efficiency often requires an initial investment. Fortunately, there are several avenues landlords could explore to support these upgrades.
1. Remortgaging could help fund property improvements
If you have equity in your property, remortgaging could provide access to funds for energy-efficient upgrades. If you’re on a tracker- or variable-rate mortgage, you likely won’t need to pay early repayment charges (ERCs) but if you have a fixed-rate deal, you may have to pay an ERC if you remortgage before the end of your agreement.
Keep in mind that remortgaging typically involves new affordability checks, as lenders want to ensure you can still comfortably cover the monthly repayments.
We can help you with remortgaging, making it easier to understand how much equity you could release and what this could mean for your finances.
2. Government grants and incentives can help boost budgets
The government offers several grants and incentives to support energy-efficient home improvements. These include schemes such as the Energy Company Obligation (ECO) scheme and the Boiler Upgrade Scheme (BUS).
The ECO scheme could provide funding to landlords to help with the installation of energy-efficient measures, but the property must be in an area with high levels of fuel poverty. The current round of funding will expire in March 2026, or when participating energy companies reach their obligation.
The BUS incentive offers landlords in England and Wales the chance to replace fossil-fuel heating systems, with funding available for air source heat pumps, ground source heat pumps, and biomass boilers.
Remember that eligibility criteria apply for these schemes and can vary depending on the property type and the specific upgrades being undertaken.
3. Green mortgages could unlock lower interest rates
Green mortgages are specifically designed to support energy-efficient home improvements.
These mortgages can offer helpful features such as lower interest rates, cashback offers, or dedicated rewards specifically for undergoing energy upgrades. While a green mortgage typically requires that a property already has an EPC rating of “A” or “B”, some lenders offer additional borrowing incentives that could help cover the cost of making improvements.
Furthermore, once you have made improvements to your property, you may be able to apply for a green mortgage to help reduce your interest rate.
Get in touch
While we can’t know for certain if the current proposed EPC regulations will remain in place, being prepared can help provide peace of mind and make it easier to tackle challenges head-on. Moreover, for tenants dealing with high energy costs, the appeal of an energy-efficient home may inform their decision when looking for a new home to rent.
For advice about how to use your property's equity to manage the cost of home renovations, please get in touch. If you’re unsure how the changing EPC rules could affect you, talk to us today.
Email info@alturafin.com or call us on +44 (0) 20 3411 0079.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only. All information is correct at the time of writing and is subject to change in the future. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. The Financial Conduct Authority does not regulate buy-to-let (pure) and commercial mortgages.
