Almost an EPC C? Why upgrading now could cost less than you think

From October 2030, most privately rented properties in England and Wales will need to meet a minimum EPC rating of C, or risk being taken off the market. Meanwhile, a new assessment methodology is set to change how EPCs are calculated, potentially reshaping property scores and making it more complex and costly. Public affairs officer Mia Rotaru explains what landlords should consider, and how deductible expenses could help reduce the cost of upgrading now.

What can you do now?

If your property is already near a C rating, it might be wise to act sooner rather than later. EPCs issued now will stay valid for up to 10 years. If your property is currently a high D, relatively minor improvements could elevate it to a C under the current assessment method. However, after the assessment model changes, those same improvements may not result in the same boost and far more costly. These are some minor changes that could bring you up to a C now: 

• Loft insulation top-up 

• Cavity wall insulation 

• Upgrading to LED lighting 

• Installing heating controls or a smart thermostat 

The EPC certificate of your property should include a recommendation with suggested improvements to help you reach a higher rating. This can help identify the most cost-effective steps to achieve a C. 

EPCs, what can you claim back?

Costs vary significantly depending on the property type, construction, existing efficiency measures and location. However, some energy efficiency improvements may qualify as revenue expenditure, allowing them to be deducted from rental income in the same tax year. 

The Government has confirmed that revenue expenditure is generally deductible where the work repairs, maintains or restores the property, or replaces an existing asset or system, without fundamentally improving or enlarging it. 

For example, replacing a gas boiler with an air source heat pump, ground source heat pump, or heat battery system is usually deductible, provided it replaces the previous system and does not increase heating capacity or extend coverage to new areas.  

Similarly, replacing single-glazed windows with double glazing is normally treated as revenue expenditure where the improvement arises solely from the use of modern equivalent materials. 

The deductible amount covers the cost of the new system, installation, pipework, electrical works, and repairs. Furthermore, until March 2027, supplies and installation of qualifying energy-saving materials, such as insulation and heat pumps (air- and ground-source), might be eligible for zero-rated VAT. 

If you use grants or funding for the upgrades: 

• Your own contribution is treated as the deductible expense.

• In this case, only your personal investment will count towards the PRS MEES cost cap. 

• Until March 2027, the materials and installation of heat pumps could be eligible for zero-rated VAT. 

What about grants?

The Government has confirmed that certain grants will remain available and can count towards the £10,000 cost cap, and at the moment, there are a number of grants that might help you with your retrofit progress: 

• Boiler Upgrade Scheme:  Provides grants of up to £7,500 towards the cost and installation of a heat pump, or up to £5,000 towards a biomass boiler, where replacing fossil fuel systems. 

• Warm Homes Local Grant: Provides funding for landlords to improve energy efficiency in private rented properties with an EPC rating of D–G. Landlords can receive full funding for one property, with a 50% contribution required for additional properties. The scheme targets low-income households, and applications are made through local authorities. 

If your property is near EPC C, it might be wise and less risky to upgrade sooner, especially while the current assessment method is still in use.  

As 2030 draws closer, proactive planning rather than last-minute efforts could prove the most efficient approach. 

More information

• For more information about the proposed changes and the latest government announcements on the Warm Homes plan, the EPC, and MEES, click here.  

• The NRLA’s award-winning Training Academy runs an energy efficiency course giving you all you need to know on energy efficiency and how to access funding. Click here for more information and to book.  

• NRLA partner Domna is a one stop shop, when it comes to helping you improve your properties Energy Performance Certificate (EPC) ratings. For more information click here.   

• Part of the NRLA family, Safe2 is a one-stop-shop for all things compliance, allowing you to organise inspections and order safety certificates, including EPCs, at the click of a button. For more information click here.  

• This article is for general information only and does not constitute financial or tax advice. You should seek independent professional advice before making decisions based on its content