The expert opinion on energy efficiency reforms
Expert insight from our Director of Operations, Nikki Lewis.
In the last few weeks, we’ve learnt a lot about the government’s intentions to change EPCs and introduce new minimum energy efficiency standards. If you haven’t already read our updates on each topic, I recommend taking a look:
- Changes to the scoring and display of EPCs
- New minimum energy efficiency standards
- Alternatively, we’ve condensed this information into a Frequently Asked Questions page
Some landlords have asked what I think of the new proposals, and what I recommend they do now or once the changes are confirmed, so I've shared my thoughts below.
Support for sustainability, but with a practical approach
Addressing climate change is essential, and everyone has a role to play in it, but changes need to be fair and achievable. Landlords must be given a reasonable timeframe to comply with new minimum standards, along with the necessary tools – such as clear guidance, financial support, and access to skilled tradespeople – to carry out upgrades effectively
Respond to the consultation before it closes
The consultation that seeks to improve the energy performance of privately rented homes is open for comments. I highly recommend landlords get their thoughts across by responding to it before it closes on 2nd May 2025. Feel free to use some of my points in your submissions – if you agree with me, of course!
A deadline that’s too tight and unclear expectations
I think the proposed timeline for landlords to comply with new energy efficiency standards is impractical. With legislation expected in the latter half of 2026, landlords may have less than 18 months to evaluate requirements, secure funding, carry out necessary upgrades, and obtain an updated EPC. This period is insufficient, particularly considering the financial burden – and that’s even with a £15,000 cap on improvements. Extending the timeframe would help landlords transition smoothly and without disruption to their business or their tenants.
Additionally, landlords require clear guidance on the specific energy efficiency standards they must meet. Waiting until 2026 for further details is unrealistic, as uncertainty could lead to confusion and potential non-compliance. Landlords (and their agents!) need to fully understand the requirements well in advance and have adequate time to meet the new minimum standards.
An unrealistic undertaking
According to Rent Smart Wales data, nearly two-thirds (61.3%) of properties in Wales currently fall below the EPC ‘C’ rating, which is roughly where the new minimum standard is expected to be pitched (albeit with new criteria and ratings).
When you bring England into the picture as well, the number swells to 2.5 million rented properties needing work. In order to meet the government’s proposed deadline, it’s estimated that homes will need to be retrofitted at a rate of 5,000 per working day, which is just not going to happen.
And who is going to do the work? At a time when the push towards net zero fuels demand for trades, research by Kingfisher – who own B&Q, Screwfix and TradePoint – suggests that the UK is on course to face a shortfall of 250,000 tradespeople by 2030. Without a clear plan to address this, landlords will struggle to secure the skilled professionals needed to meet the proposed targets, leading to delays, rising costs, and concerns over the quality of work.
The impact of the cost
In their consultation, the government predict that, on average, properties will require between £6,100 and £6,800 worth of work to meet the new minimum standards. Even if that estimate is correct, it’s an average, so some properties will require a significantly higher spend.
Landlords are often portrayed as having endlessly deep pockets, when in reality the vast majority are individuals and basic rate taxpayers, almost half of whom rent out just one property.
Spending £6,000+ is going to come as a significant blow, and as landlords are ultimately running businesses, they will seek to recover it through rents over time, which isn’t good news for tenants in a cost-of-living crisis. Others will sell up and the property will leave the sector altogether, which will worsen the current housing supply crisis.
Access to funding is essential
I think the proposed increase in cost cap from £3k to £15k is too big a jump. Talk of an affordability exemption that will see the cap reduced to £10k (depending on eligibility) is welcomed, but that’s still not a small amount.
Landlords require straightforward and accessible funding solutions to assist with property upgrade costs, especially in areas where property values and rents are low.
The government was near-silent on funding in the consultation, saying they’ll set out further measures later. They point out existing funding options, but they won’t be enough and eligibility criteria is too strict, so watch this space.
Exemptions
Many landlords are unaware that exemptions exist for properties that do not meet the current minimum energy efficiency standards. It’s essential to understand these exemptions, as they are expected to remain in place. Here’s a quick overview:
- ‘All relevant improvements made’ exemption – Applies when all possible improvements up to the cost cap have been carried out, or no further improvements can be made, yet the property still falls below the required standard.
- ‘High cost’ exemption – Applies if the cost of installing the cheapest recommended improvement exceeds the cost cap, making upgrades financially unviable.
- Third-party consent exemption – Applies when required upgrades need approval from another party (such as a tenant, superior landlord, mortgage lender, freeholder, or planning department), but consent cannot be obtained despite best efforts, or it is granted with unreasonable conditions.
- Property devaluation exemption – Available if an independent surveyor provides evidence that making the required energy efficiency improvements would reduce the property's value by more than 5%.
- Wall insulation exemption – Applies when the only relevant upgrades involve cavity wall insulation, external wall insulation, or internal insulation for external walls, and expert written advice confirms these changes would compromise the property’s structure or fabric (or that of the larger building it is part of).
- New landlord exemption – Currently complex, but the government plans to simplify it. Moving forward, a six-month exemption will apply to all new landlords where a tenant is already in place.
Each exemption must be officially registered and is subject to review after a specified period.
Doubts over the aims and method of new EPC rating system
It looks almost certain that we’re going to move away from one overall energy efficiency rating to four new headline metrics:
- Fabric performance: the thermal efficiency of a building’s structure, promoting the importance of insulation for comfort and energy savings.
- Heating system: the efficiency and environmental impact of the heating source, encouraging the adoption of cleaner technologies.
- Smart readiness: a building’s ability to integrate smart technologies that optimise energy use and take advantage of cheaper smart tariffs.
- Energy cost: helps individuals understand the financial implications of a property’s energy efficiency and make informed decisions about potential improvements.
Fabric performance will be the first rating landlords need to be hit to be compliant, then they can choose either heating system or smart readiness.
Interestingly, despite being one of the headline metrics, the cost of energy won’t have a minimum standard attached to it. I can see why given we’re not in control of the cost of energy, but considering Government’s primary goal is to “cut bills for families and slash fuel poverty”, I can’t help thinking their focus on low carbon heating is causing a blind spot for energy costs.
The new scoring system will rate all low-carbon heating systems (such as electric heaters) higher than all non-renewable heating systems (such as gas boilers). This could mean, for instance, an inefficient heat pump or electric heater is rated better than a low-cost, efficient gas boiler. In some cases, this may result in higher expenses for tenants, which I believe is unfair.
First and foremost, tenants want a warm home and cheaper energy costs. If that can come through renewable energy sources, great, but they won’t want to pay through the nose for it.
Also, with the introduction of a ‘smart readiness’ metric, the government must ensure that older properties without access to low-carbon heating or technologies like EV charging points are not unfairly penalised.
EPC cost will rise
Ignoring the cost of making the actual energy efficiency upgrades for the moment, it’s clear to me that the cost of commissioning an EPC is going to increase. The deeper assessment criteria will mean assessors spend more time at the property, which they’ll – understandably – want to charge extra for. If the validity period of EPCs remains at 10 years, landlords are unlikely to quibble over the increased cost, but if the Government decide they need reproducing every 5 years – or potentially even more frequently – landlords might expect more in rent to cover the additional layout.
Practical advice on what landlords could do now or soon
Given that properties rated A-C will be deemed compliant with the new minimum standards when EPC reform takes effect in the second half of 2026, landlords with those ratings might want to get a new EPC in early 2026, even if it’s not due for renewal. Doing so locks in a 10-year compliance, meaning no work would be required until 2036. Even then, your property might still meet the standards, avoiding costly upgrades altogether. One caveat: the government is considering reducing EPC validity from 10 years, but it’s unclear if this will apply to existing certificates.
For landlords just shy of a ‘C’, small upgrades now – especially for properties with gas central heating, which the new EPC system will penalise for carbon emissions – could be worthwhile for the same reasons as given above.
For landlords facing a significant spend to reach a ‘C’, my advice is to wait. Once the new EPC metrics launch, get a fresh certificate, review your new rating, and assess the recommended improvements and funding options. Crucially, any work done before the new minimum standards are confirmed in late 2026 won’t count toward the proposed £15,000 cost cap – another reason to hold off. That said, if the government’s timeline holds, landlords will only have between late 2026 and 2028 to comply for new tenancies (2030 for existing ones), so staying informed is key. As always, we’ll keep you up-to-date.
Final thoughts: stay informed and plan ahead
The proposed EPC changes present significant challenges for landlords, from tight compliance deadlines to rising costs and uncertainties around funding and tradesperson availability. While sustainability is crucial, the government must ensure that any new regulations are fair, achievable and well-supported.
For landlords, the best approach right now is to stay informed, respond to the consultation before it closes on 2nd May 2025, and plan ahead without rushing into costly upgrades prematurely. At CPS Homes, we’ll continue to monitor developments closely and provide expert insights to help you navigate these changes with confidence.
If you have any questions or concerns about how the proposed EPC rules could impact your properties, feel free to get in touch – we’re here to help.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
