Government Consultation Reveals Landlord Responses to EPC Reforms

The UK government’s recent consultation on improving the energy performance of privately rented homes has exposed unintended consequences of planned EPC reforms. The consultation document, part of the Improving the Energy Performance of Privately Rented Homes impact assessment, outlines how new rules requiring all private rented sector (PRS) properties to meet EPC C by 2030 could affect landlords and tenants.

This comes alongside government plans to reform EPC calculations, introducing a new system of four headline metrics instead of the current single cost metric. These changes aim to provide a more comprehensive assessment of a building’s energy efficiency but also introduce uncertainty about landlord responses.

Landlords May Exit the Market Due to Costs

The consultation acknowledges that some landlords might find it more financially viable to sell their properties rather than comply with the higher energy efficiency standards. It cites previous EPC regulations, which led to a decrease in the value of EPC F/G rated properties by approximately £5,000 to £9,000 compared to unaffected properties.

The document states: “Landlords may decide to exit the market. The likelihood of this is dependent on the current profitability of their rental property, the level of costs they face, the price landlords would receive from the sale of their property and their wider financial circumstances.”

It further explains that while some landlords might choose to invest in improvements and remain in the market, those facing the highest upgrade costs may find selling less costly than meeting the new standards.

Potential for Rent Increases Passed to Tenants

The government also anticipates that some landlords could pass the costs of compliance onto tenants through higher rents. However, the consultation notes that tenants’ ability to absorb rent increases is limited, with nearly a third (32%) of private renters in 2023–24 reporting difficulty affording their rent.

“This, coupled with an expected slowdown in real wage growth and significant rises in rents in recent years, means there may be limited scope for tenants to pay higher rent levels and therefore for landlords to charge them,” the document explains.

Nevertheless, tenants might accept rent increases if these are offset by lower energy bills resulting from improved energy efficiency. The consultation adds: “Tenants therefore, may be more willing to accept an increase in rents in exchange for lower energy bills. This is dependent on the level of costs passed through to rents as well as the tenant’s ability to accurately compare the trade-off between the rise in rents and expected energy savings.”

Changes to EPC Measurement Metrics

The government plans to replace the current single cost metric with four new headline metrics: energy cost, fabric performance, heating system, and smart readiness. This approach aims to give a more detailed picture of a property’s energy performance.

However, the consultation admits uncertainty about how landlords will respond to these different metrics. It notes that fabric-based elements are likely to resemble the final EPC metric more closely than the smart or heating system options, which are based on single measure installations such as solar panels or heat pumps.

“Because the smart and heat metrics are based around single measure installations (solar PV and heat pumps, respectively), the results are more polarised than if the metric had more compliance points,” the document states.

The consultation also highlights that market trends and the timing of regulation implementation could affect uptake of energy efficiency measures. For example, insulation is often installed alongside other renovations, solar PV adoption is increasing without government support, and heat pumps are expected to play a key role in decarbonisation by the late 2020s.

It adds that the demand for construction workers to meet higher energy standards and the Decent Homes Standard may push up wages for certain trades, potentially increasing costs for landlords.

What This Means for UK Landlords

UK landlords should prepare for potential financial and operational impacts from EPC reforms. Some may face difficult decisions about whether to invest in costly upgrades, pass costs onto tenants, or exit the market altogether. The shift to new EPC metrics could also require landlords to reassess how they approach energy efficiency improvements.

Understanding these developments will be crucial for landlords and letting agents to manage compliance, maintain profitability, and support tenants through changes in the PRS.

Suggested internal link anchors

• Energy Performance Certificate (EPC)
• private rented sector
• minimum energy efficiency standards (MEES)
• landlord property sales
• rent increases
• energy efficiency improvements
• solar PV installations
• heat pumps
• Decent Homes Standard
• construction costs
• tenant affordability
• energy bills

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/