EPC targets - ambition is one thing, affordability is another

As 2025 comes to a close, NRLA chief product officer James Kent looks ahead to next year and government plans for a minimum EPC C across the private rented sector (PRS) – proposals set to hit many landlords in the pocket.  

Next year promises yet more upheaval for landlords. 

But while the first phase of the Renters’ Rights Act and the rollout of the new Making Tax Digital system are stealing the headlines, it is the Government’s proposals for new minimum energy efficiency standards that are giving many of you sleepless nights. 

What is the Government proposing?

To recap, ministers launched a consultation earlier this year on plans to introduce a minimum EPC rating of C for privately rented homes. 

Under the plans, the rules will apply to new tenancies from 2028 and to all existing ones by 2030 – with landlords whose properties fall below C expected to fork out up to £15,000 a property to pay for improvements. 

This is a mammoth task, with around 2.5million properties falling into that category – and unless they qualify for an exemption, they’ll require work to be legally rented out. 

At present we are waiting to hear what the final proposals will look like – something we have been told to expect by the end of the year.  

Is this achievable?

In short, no – on a number of counts. 

First, cost. Our analysis of polling by independent research consultancy Pegasus finds that the limit most landlords can afford is around half the £15k figure, at £7,700.  

Anything above this, landlords deem unaffordable. 

There is also the issue of the proposed timescales.  

By the time the regulations are out – the latter part of 2026 – landlords will have between just two and four years to meet the new standards.  

Just to reiterate we are talking 2.5 million homes.  

The numbers don’t stack up, not least as there is a huge shortfall in skilled tradespeople, which is set to increase to a 250,000 deficit by 2030. 

This is against a backdrop of funding cuts for energy efficiency schemes, with think tank E3G suggesting the Autumn Budget cut total funding for energy efficiency schemes by a quarter over the current parliamentary term. 

What do we want to see happen?

We are actively campaigning on your behalf, warning the Government that the plans as they stand are unworkable, and calling on them to go back to the drawing board to establish a realistic timeline and comprehensive package of financial support. 

We also want:  

• All energy efficiency investments by landlords to be made deductible against income tax. 

• The £15,000 spending cap be graduated according to the value of a property. 

Without this graduation there will be a higher financial burden on landlords in lower-value areas, where the value of the improvement is disproportionate to the value of the property and rents are lower. 

Don’t get me wrong we all want rental properties to be as energy efficient as possible, but we need to be realistic as to how we can achieve this. 

Without this, there is the very real risk that hundreds of thousands of homes could be removed from the rental market altogether.  

Time and again we have warned the Government we landlords are not fat cats, with data from HM Revenue and Customs backing this up, showing the average rental income declared by unincorporated landlords is just £19,400 a year. 

And it isn’t just us pointing this out, with the Committee on Fuel Poverty calling for ministers to consider new tax measures to support the investments needed.  

If the Government is serious about its plans, it needs to engage with the sector now to develop a clear, bespoke package to help responsible landlords invest in energy efficiency works.