More than half of homes across England and Wales currently fall below the government’s energy performance certificate (EPC) targets, with 55% of properties rated band D or lower. This highlights significant challenges ahead for landlords and agents as new regulations and measurement methods come into force.

Current EPC Ratings and Their Implications

Research by Emperor Paint, analysing data from the Department for Levelling Up, Housing and Communities, reveals a clear skew towards lower EPC bands. Properties rated band D or below account for 55% of the housing stock in England and Wales. EPC scores range up to 100, with band D covering scores from 55 to 68. Bands E, F, and G indicate weaker insulation and less efficient heating systems, signalling homes that are less energy efficient and potentially more costly to heat.

Jack Reading of Emperor Paint emphasises the limitations of current EPC assessments, stating: “Changes to energy performance certificates mean that they will now be based on how properties retain heat, rather than how much energy a property uses.” He warns that without properly accounting for how walls perform under real, weather-exposed conditions, EPC scores risk overlooking a key factor influencing heat loss.

Reading adds, “As climate pressures intensify, this gap is only set to widen, meaning properties could appear more energy efficient on paper than they are in practice, an issue that is particularly significant given the UK’s ageing housing stock.” This suggests that many homes may currently be overestimated in terms of energy efficiency, posing challenges for landlords aiming to meet future standards.

Regional Variations in EPC Performance

The distribution of lower EPC ratings varies significantly across regions. The Isles of Scilly tops the list, with 84.97% of homes rated in bands D to G, representing 1,102 properties. Gwynedd follows with 74.32% (42,721 homes), closely trailed by Pendle at 74.05% (35,686 homes).

Other areas with high proportions of lower-rated homes include Ceredigion (72.97%), Castle Point (72.59%), and Blackpool (72.04%). Barrow-in-Furness and Hyndburn both exceed 71%, while Eden and Copeland surpass 70%. Bradford stands out with 187,403 homes rated D or below, accounting for 66.98% of its housing stock.

Upcoming Changes to EPC Standards for Rented Homes

Currently, the lowest acceptable EPC band for rented homes is band E. However, this benchmark is set to rise significantly. From 1 October 2030, all tenancies will be required to meet an equivalent of band C, with earlier structural changes to the EPC system scheduled before this date.

A revised EPC framework, known as the Home Energy Model (HEM), will be introduced this year and become mandatory from 1 October 2029. Unlike the current system, the HEM will assess properties based on how well they retain heat rather than simply measuring energy consumption.

The new model will evaluate several key factors:

• Smart readiness – the property’s ability to generate its own energy, such as through solar panels;
• Heating systems – the efficiency of heating, with technologies like heat pumps considered more efficient;
• Fabric performance – how effectively the property retains heat via insulation, draught-proofing, and windows;
• Energy cost – the annual cost of running the home, including gas and electricity expenses.

What this means for landlords

Landlords must prepare for stricter energy efficiency requirements that will impact both existing and new tenancies. With over half of homes currently rated below band D, significant investment may be necessary to improve insulation, heating systems, and overall fabric performance to meet upcoming standards.

The shift to the Home Energy Model means that properties will be assessed more rigorously on heat retention, potentially revealing inefficiencies not previously captured. This could affect property valuations, rental demand, and compliance costs.

Proactively addressing these issues will be essential to avoid penalties and ensure properties remain attractive to tenants. Staying informed about the evolving EPC framework and planning upgrades accordingly will be crucial for landlords and agents navigating this changing landscape.

Source: Based on reporting from Property118

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