Energy Performance Certificate (EPC) ratings are becoming a key factor for tenants when selecting rental properties, with a significant majority now prioritising energy efficiency. This shift presents both challenges and opportunities for landlords, particularly those with larger or detached properties that tend to have lower EPC ratings and higher heating costs.

Growing Tenant Demand for Energy-Efficient Homes

A recent report by Hillarys highlights a clear trend: 86% of renters now consider energy efficiency a priority when choosing a home, and over half (52%) are willing to pay a 10% premium for properties with higher EPC ratings. This growing tenant preference is influencing landlord decisions, with nearly two in five landlords (38%) planning to sell their properties within the next year, often citing energy efficiency requirements as a primary factor.

For landlords, this means that properties with lower EPC ratings may become harder to let, particularly as tenants become more aware of the financial implications of poor energy performance. Lower-rated properties expose tenants to significantly higher energy costs, which can impact demand and rental income.

Impact of Property Type on Energy Costs and EPC Ratings

The report reveals a postcode divide and notable differences in heating costs across property types. Detached houses, which are common in the UK (where 78% of people live in houses), tend to be the least energy-efficient and most expensive to heat. On average, heating a detached house costs £1,974 per year, more than three times the cost of heating an enclosed end-terrace flat (£574).

Properties rated E on the EPC scale cost tenants approximately £1,942 annually to heat, which is 313% more than an A-rated property, where heating costs average £470 per year. This disparity emphasises the financial burden on tenants in lower-rated homes and the potential impact on landlords’ ability to attract and retain tenants.

Landlords with larger or detached properties may face significant retrofit costs to improve EPC ratings and remain competitive in the rental market, especially if tenants continue to prioritise running costs when choosing homes.

Practical Measures to Improve Energy Efficiency and Tenant Appeal

While comprehensive EPC upgrades can be costly and time-consuming, landlords can implement smaller, cost-effective measures to enhance energy efficiency and tenant appeal in the short term. Lisa Cooper, head of product at Hillarys, advises that preventing heat loss through windows is crucial to keeping energy bills low and properties warm.

Simple actions such as sealing draughts, using thick curtains, and ensuring windows are properly insulated can make a noticeable difference. Additionally, installing thermal blinds, which feature a honeycomb structure that traps air and provides an extra layer of insulation, can reduce heat loss by up to 55%. These measures can help landlords maintain tenant interest while planning longer-term EPC improvements.

Regional Variations and EPC Challenges

The study also highlights regional disparities in EPC ratings and heating costs. In York, for example, almost two-thirds of homes have an EPC rating of D or below, while in Stoke-on-Trent, more than half (52.03%) fall into this category. Historic and coastal locations such as York (£1,181), Dundee (£1,134), and Bath (£1,064) tend to have higher energy costs due to older stone buildings and exposure to harsher weather conditions.

These regional factors add complexity for landlords aiming to improve energy efficiency and manage heating costs, particularly in areas with older housing stock and challenging climates.

Implications for UK Landlords

For landlords, the increasing tenant focus on EPC ratings underscores the importance of investing in energy efficiency measures. Properties with poor EPC ratings risk longer void periods and reduced rental income, while better-rated homes can command higher rents and attract more reliable tenants.

Understanding the specific challenges associated with property type and location can help landlords prioritise retrofit investments effectively. Small improvements can enhance tenant satisfaction and reduce energy costs, but longer-term upgrades will be essential to meet evolving regulatory standards and market expectations.

Looking Ahead: Support for Landlords

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026, designed to support landlords, tenants, and property management businesses by providing access to verified and approved service providers. This initiative will include legal, trades, insurance, financial, mortgage, tenant screening, and other services tailored to landlord needs. Service providers interested in joining the Trusted Partners Hub can register their interest at the Landlord Association website.