Ambitious target aims to make homes warmer, greener, and cheaper to operate
New government proposals are set to significantly change the energy efficiency standards for rental properties across England and Wales. As part of its Warm Homes Plan, the government plans to increase the minimum required Energy Performance Certificate (EPC) rating for privately rented homes from the current E grade to a more stringent C grade. This ambitious target aims to make homes warmer, greener, and cheaper to operate.
The changes are set to be gradually implemented, affecting all new tenancies from 2028. By 2030, every existing tenancy will also be required to meet the new C-rating minimum. This move marks a significant step up in requirements, imposing greater responsibility on landlords to improve the energy performance of their properties, ultimately benefiting tenants and supporting national climate targets.
New way of measuring
Alongside the higher standards, the entire EPC system is scheduled for a major overhaul from 2026. The current methodology, which is based on the estimated running costs of a property, will be replaced. This has sometimes been criticised for penalising homes that use electricity for heating, such as those with modern heat pumps, because electricity is often more expensive than gas.
The new system will focus on three main areas of performance. It will evaluate the efficiency of a property’s heating system, prioritising modern solutions like heat pumps. It will also assess “fabric performance,” which measures how well the building retains heat through its insulation, windows, and draught-proofing. Lastly, it will consider a property’s “smart meter readiness,” promoting the adoption of technology that helps monitor energy use more precisely.
2030 government target
Achieving this widespread upgrade presents a significant challenge. According to analysis by the estate agency Hamptons, if landlords continue making improvements at the current rate, it would take until 2042 for all rental homes to meet the new C standard. To reach the 2030 government target, an estimated 340,000 rental properties will need to be upgraded each year.
Data from the Ministry of Housing, Communities and Local Government shows a mixed picture of progress. Between January and August 2024, of the rental homes that received new EPCs, 39% moved into a higher efficiency band. However, 13% actually dropped into a lower band, while 48% saw no change at all. As it stands, 55% of rental properties already have a rating of C or higher, but it is estimated that up to 4% may never be able to achieve this minimum standard.
Counting the cost
For landlords, these new rules will inevitably bring financial considerations. A 2025 study by Simply Business revealed that over half of landlords (55%) believe they will need to make improvements to meet the 2030 deadline. When asked about the potential costs, 38% anticipated spending between £1,000 and £10,000 on the necessary works.
A smaller but notable 13% expect the bill for upgrades to exceed £10,000. Common priorities for landlords include increasing loft insulation (23%), upgrading windows to double or triple glazing (20%), and improving draught-proofing (15%). More extensive projects such as installing solar panels (12%) or a heat pump (11%) are also under consideration.
Benefits for tenants
Although the initial expense for landlords is considerable, the long-term advantages for tenants are evident. More energy-efficient homes lead directly to lower utility bills, providing welcome relief amid ongoing concerns about the cost of living. Research from Hamptons highlights the potential savings clearly.
A tenant in an average property with an EPC C rating could expect to pay £499 less per year on bills compared to someone in a similar property with a D rating. The savings become even more significant when comparing a C-rated home to an E-rated one, with the estimated annual saving rising to £1,248. This financial incentive could boost tenant demand for properties with better energy ratings.
Looking ahead
The proposed changes are currently subject to a period of government consultation, which closed on 2 May 2025. The results of this process will determine the final regulations and the exact timeline for implementation. Landlords and tenants alike are waiting for the outcomes, which will offer much-needed clarity on spending caps, possible exemptions, and the future of the EPC system.
As deadlines draw nearer, landlords will feel increased pressure to evaluate their properties and plan for necessary upgrades. For many, this will mean commissioning a new EPC assessment to determine their starting point and identify the most cost-effective route to achieving a C rating. The push towards higher standards is not merely a regulatory challenge; it marks a fundamental shift towards a more sustainable and efficient rental market in the future.
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