Rising energy costs are increasingly influencing the UK property market, with buyers and tenants showing a stronger preference for homes that have higher Energy Performance Certificate (EPC) ratings. As the energy price cap is set to increase by 13% in July 2026, households living in less energy-efficient properties face significantly higher annual energy bills, prompting a shift in demand towards more energy-efficient homes.
Energy Price Cap Increase and Its Impact on Household Costs
The energy price cap, which limits the maximum amount suppliers can charge consumers per unit of energy, is scheduled to rise by 13% this July. This change will affect millions of households across the UK, with those living in properties with lower EPC ratings expected to see the most substantial increases in their annual energy bills.
Data from Rightmove highlights that a home rated EPC A might experience an annual bill increase of approximately £65, whereas properties rated EPC C and D could see rises of around £205 and £284 respectively. The most significant impact will be felt by households in EPC G-rated homes, where annual energy costs could increase by as much as £591. This disparity underscores the financial implications of energy efficiency in the current market.
Growing Importance of Energy Efficiency in Property Choices
Energy efficiency is becoming a key factor for prospective buyers and tenants when selecting a home. More than half (52%) of properties currently on the market hold an EPC rating of D, reflecting a substantial portion of the housing stock that may be less energy efficient. The rising cost of energy is driving demand for modern, energy-efficient homes, as consumers seek to manage their ongoing living expenses.
Rightmove’s analysis indicates that during periods of global uncertainty, such as the conflict in Iran earlier this year, there was a notable 35% increase in demand for homes with the highest EPC ratings compared to the previous year. This trend suggests that energy efficiency is increasingly prioritised as a means of mitigating the financial risks associated with volatile energy prices.
Challenges and Considerations Around EPC Targets
While there is growing emphasis on EPC ratings among tenants and buyers, industry experts caution against a uniform approach to meeting EPC targets, such as the government’s goal for all rental properties to achieve at least an EPC C rating by 2030. Older and traditional homes, in particular, may face challenges in meeting these standards without significant investment or adaptation.
Nathan Emerson, CEO of Propertymark, has highlighted the need for reforms to the EPC system to ensure it more accurately reflects actual energy performance and provides practical guidance for improvements. He emphasises that any efforts to enhance the energy efficiency of the UK’s housing stock should be supported by realistic timelines and financial assistance to ensure that landlords and homeowners can afford and implement necessary upgrades.
Implications for the Private Rented Sector
For landlords and letting agents, the increasing focus on energy efficiency has direct implications for property management and compliance. As tenants become more aware of the running costs associated with different EPC ratings, properties with lower ratings may become less attractive, potentially affecting rental demand and occupancy rates.
Landlords may need to consider investing in energy efficiency improvements not only to comply with regulatory requirements but also to maintain the marketability of their rental properties. This could include measures such as upgrading insulation, installing more efficient heating systems, or fitting double glazing. However, the cost and feasibility of such improvements can vary widely depending on the property type and age.
What this means for landlords
Landlords should be aware that rising energy costs are likely to increase tenant demand for properties with better EPC ratings. Properties with lower energy efficiency may face longer void periods or require rent adjustments to remain competitive. It is advisable for landlords to review their properties’ EPC ratings and consider the potential benefits of energy efficiency upgrades, both for tenant satisfaction and compliance with evolving regulations.
Additionally, landlords should keep informed about government policies and support schemes aimed at improving energy efficiency in the private rented sector. Engaging with professional advice and resources can help landlords plan cost-effective improvements and understand their obligations under the latest standards.
What TLA members should consider
- Review the current EPC rating of your rental properties and identify those with lower ratings that may be vulnerable to increased energy costs and reduced tenant demand.
- Explore available grants, loans, or government schemes that support energy efficiency improvements to help manage upgrade costs.
- Communicate clearly with prospective and current tenants about energy efficiency measures and potential impacts on energy bills to build trust and transparency.
- Stay updated on changes to EPC regulations and compliance deadlines to ensure your properties meet legal requirements and avoid penalties.
- Consider consulting energy assessors or property professionals for tailored advice on cost-effective improvements suited to your property type.
- Utilise resources such as the TLA Academy for training and guidance on managing energy efficiency and landlord compliance effectively.
TLA Training Academy
The Landlord Association provides structured guidance, compliance education and practical support for landlords, letting agents and property professionals. Members can access training and resources designed to help them stay organised, informed and prepared.
Landlords can explore the Academy here: https://landlordassociation.org.uk/tla-academy/
Those looking to join and access member support can register here: https://landlordassociation.org.uk/get-started-with-the-landlord-association/
TLA update
The Landlord Association is continuing to expand its support, resources and partner network for landlords, tenants, agents and property professionals across the UK. Service providers interested in working with TLA can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/
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