The UK government has confirmed that all rental properties must achieve a minimum Energy Performance Certificate (EPC) rating of C by 2030. This marks an increase from the current minimum standard of E and is a key initiative aimed at improving energy efficiency in rental homes.

A Step Towards Greater Energy Efficiency

As part of its broader Plan for Change strategy, the Labour government introduced this requirement to enhance living standards and reduce energy costs. The policy is expected to lift up to half a million households out of fuel poverty by ensuring rental homes are more energy-efficient.

To comply, landlords will have flexibility in how they meet these standards. Potential improvements may include upgrading insulation, installing double glazing, and adopting other energy-saving measures. These changes could save tenants an estimated £240 per year on energy bills.

Financial Support for Landlords

To help landlords transition to higher energy standards, the government has set a cost cap of £15,000 per home, an increase from the previously proposed £10,000 cap. Landlords can also access government grants, such as the Boiler Upgrade Scheme, to help offset costs.

The Challenge: Upgrading Nearly 3 Million Rental Homes

Achieving the new EPC standard presents a significant challenge, as an estimated 2.9 million rental properties need upgrades to meet the C rating. While the benefits of greener homes include lower energy bills and reduced carbon footprints, the financial burden remains a concern for many landlords.

In Rightmove’s 2024 Greener Homes Report, we surveyed landlords about their views on the new targets. Half (50%) expressed concerns about potential fines for non-compliance within the set timeframe. As a result, some landlords may choose to sell their properties rather than invest in costly upgrades. Others may pass these costs onto tenants through higher rents.

According to our property expert, Tim Bannister: “In the rental market, landlords aim to provide comfortable, energy-efficient homes. However, the cost of green upgrades can be significant. For landlords with lower-value properties, the financial returns may not always justify the investment.”

Addressing the Financial Barriers to Green Upgrades

Labour’s Warmer Homes Plan pledges £6.6 billion to help upgrade homes below a C rating. However, this falls short of the estimated £23.4 billion required to retrofit rental properties nationwide.

The Rightmove Green Homes Report outlines several measures that could help landlords and renters achieve these targets:

• Targeted financial support – Introduce grants or long-term, low-interest loans for homeowners and landlords of properties under £400,000, as these are the least likely to have undergone green upgrades.
• Tax incentives – Allow landlords to offset the cost of energy-efficiency improvements against income tax in the year of expenditure, rather than capital gains tax upon sale.
• Stamp duty rebates – Offer rebates for buyers who make green improvements within the first few years of purchasing a property, encouraging energy-efficient upgrades.
• Green mortgage innovations – Support mortgage lenders in developing attractive financing options for energy-efficient home improvements.