161,000 rented homes cannot meet energy efficiency band C

161,000 rented homes cannot meet energy efficiency band C

Analysis shows that 161,000 private rented homes in England cannot achieve energy efficiency band C despite improvements, posing challenges for landlords ahead of the 2030 compliance deadline.

A recent analysis by Houseprice.AI reveals that approximately 161,000 privately rented homes in England will not be able to reach energy efficiency band C, even if all recommended improvements indicated on their Energy Performance Certificates (EPCs) are implemented. This figure represents about one in eleven private rental properties nationwide, with the issue particularly concentrated in inner London boroughs such as Tower Hamlets, Southwark, Lambeth, Westminster, Hackney, and Haringey, where up to one in five rented homes fall short of the band C standard.

Private landlords are legally required to ensure their properties meet at least band C by 2030, a regulation designed to improve energy efficiency and reduce carbon emissions in the housing sector. However, the data indicates a significant proportion of the rental stock will remain non-compliant due to structural or other limitations that prevent reaching the required standard. Landlords of these properties may apply for exemptions, allowing them to continue letting homes below band C beyond the 2030 deadline.

Details of the energy efficiency shortfall in the private rented sector

Houseprice.AI’s analysis, which reviewed the official EPC register covering 21.2 million homes in England and Wales, found that 53% of privately rented homes are currently rated below band C. This equates to approximately 1.9 million private rental properties. In contrast, only about one-third of social housing meets this threshold, highlighting a disparity between sectors.

The study also identified that 55,000 private lets fall below the legal minimum EPC rating of band E, being rated as band F or G, which is unlawful for letting. These properties will require urgent attention from landlords to avoid enforcement action. The analysis further revealed that private renters in rural areas are disproportionately affected, with only one in four or five private lets achieving band C, compared to better performance in urban areas.

From a cost perspective, the energy efficiency rating has a direct impact on tenants’ utility bills. For example, a tenant in a band E home pays approximately £2,080 annually for heating, hot water, and lighting, which is double the £1,020 paid in a comparable band C property. With energy price caps expected to rise by around 20% in January, this cost gap is likely to widen, increasing the financial burden on tenants in less efficient homes.

Context and implications for landlords and agents

The government’s 2030 deadline for band C compliance is part of a broader strategy to improve the environmental performance of the private rented sector (PRS) and reduce carbon emissions in line with climate targets. However, the Houseprice.AI findings highlight the scale of the challenge, especially for older properties or those with construction characteristics that limit energy improvements.

Landlords must carefully assess the feasibility of upgrading their properties to band C. For some, the cost and complexity of works may be prohibitive, particularly if the property’s fabric or design restricts insulation or heating system upgrades. In such cases, landlords can apply for exemptions, but these are subject to specific criteria and must be registered with the local authority.

Letting agents play a crucial role in advising landlords on compliance and managing tenant expectations. They must ensure that properties meet legal standards before letting and keep abreast of evolving regulations. Failure to comply with energy efficiency requirements can result in enforcement actions, fines, and restrictions on letting properties.

Practical considerations for managing energy efficiency compliance

For landlords with properties below band C, the first step is to obtain or review the current EPC to understand the recommended improvements. This will help identify whether the property can realistically be upgraded to meet the 2030 standard. If not, landlords should explore exemption routes early to avoid penalties.

Investing in energy efficiency improvements can also enhance property value and tenant satisfaction, potentially reducing void periods and improving rental income stability. However, landlords should balance these benefits against upfront costs and the property’s long-term viability as a rental asset.

Agents should support landlords by maintaining accurate records of EPCs, improvement works, and exemption registrations. Transparent communication with tenants about energy efficiency and potential impacts on bills is also advisable, particularly as energy costs rise.

Uncertainties and areas to watch

While the 2030 band C requirement is clear, some details remain uncertain, including the scope and application of exemptions and potential future tightening of standards. Government guidance on enforcement and support schemes for landlords undertaking improvements may evolve, affecting compliance strategies.

Technological advances or new funding initiatives could improve the feasibility of upgrading hard-to-treat properties. Landlords and agents should monitor policy developments and market innovations closely to adapt their approaches accordingly.

What landlords should do now to prepare

• Review current EPCs for all rental properties to identify those below band C.
• Assess the cost and practicality of recommended energy efficiency improvements.
• Consider applying for exemptions if upgrades are not feasible, ensuring proper registration.
• Keep detailed records of compliance efforts, EPCs, and communications with tenants.
• Stay informed about government updates on energy efficiency regulations and support schemes.

Supporting landlords with energy efficiency compliance

TLA membership offers valuable resources for landlords and letting agents facing the challenges of energy efficiency compliance. Members can access up-to-date guidance on EPC requirements, exemption processes, and regulatory changes affecting the private rented sector. TLA’s compliance materials help landlords organise documentation, track improvement works, and maintain evidence of compliance activities.

Additionally, TLA is developing ORBIT, a new property management and compliance platform currently available in BETA testing. ORBIT aims to assist landlords and agents in managing rental properties by organising EPC records, monitoring compliance deadlines, and recording key actions related to energy efficiency. This platform can support landlords in meeting the band C requirement by keeping all relevant information in one place, simplifying the management of complex regulatory obligations.

Exploring TLA membership and ORBIT BETA access can provide practical support to landlords preparing for the 2030 energy efficiency deadline and help ensure their portfolios remain compliant.

Looking ahead, landlords who proactively address energy efficiency issues will be better positioned to meet regulatory requirements and manage tenant costs as energy prices fluctuate. Keeping informed and organised will be essential as the sector moves towards a greener future.

Sources: Letting Agent Today