Changing EPC rules for Landlords

The UK government is proposing significant changes to the Energy Performance Certificate (EPC) rules for landlords, set to take effect in 2026. These changes are designed to provide a more accurate and comprehensive reflection of a building’s energy efficiency of all properties. They also come with new rules that could substantially impact landlords in the private rental sector (PRS). Below, I explore these proposed changes, their potential impact, and what landlords and property investors need to consider moving forward.

A New EPC Rating System for 2026

One of the major changes is the introduction of a new EPC rating system, which will assess buildings more comprehensively. Instead of a single rating, properties will now be evaluated across three key areas:

• Building Fabric (the materials and construction quality of the property)
• Heating System (efficiency and use of low-carbon energy sources)
• Smart Readiness (the ability to manage the property’s energy use efficiently)

Each of these components will be rated independently, with a strong emphasis on the building fabric first. Unlike the current EPC system—outdated and based on running costs with fuel prices from over a decade ago, with little consideration for build quality—this new method should provide a more realistic representation of energy efficiency.

Given that the housing sector widely agrees the current EPC rating system is not fit for purpose, this reform is a welcome, albeit overdue, change. With a more accurate system in place, homeowners, buyers, and renters will gain clearer insights into how to improve energy efficiency and the likely running costs of a property. Additionally, this EPC reform will support several government policy targets:

• Clean Growth Strategy: EPC C for all homes by 2035
• Net Zero Emissions by 2050
• Fuel Poverty Target: EPC C for fuel-poor homes by 2030
• EPC Rating C for Private and Social Rented Homes (the focus of this blog)

How New EPC Regulations Will Affect Landlords

Under the new system, landlords whose properties already hold an EPC rating of C or higher will be able to continue renting without requiring a reassessment. However, those with a rating below C will need to have their properties reassessed and potentially upgraded to meet new standards. The aim is to improve the energy efficiency of homes in the private rental sector.  For new tenancies the rules will come into effect from 2028.

New EPC rules and the cost for landlord compliance.

The government estimates that the cost of upgrading an average property to a C rating will be £6,500, but landlords could be required to spend up to £15,000 to make the necessary improvements.

However, for many landlords, £6,500 will not be enough to achieve a C rating, especially if major work is required, such as insulation upgrades or heating system overhauls. Even basic energy-saving interventions, such as loft insulation, could consume a significant portion of this budget. The new £15,000 cost cap (up from £10,000 in previous proposals) could substantially impact landlords, particularly those with multiple properties needing upgrades. For landlords with low-yield buy-to-let properties, this could squeeze profitability, making continued investment in the property harder to justify.

How to Prepare for Stricter EPC Rules

For landlords, the key takeaway is clear: start setting aside funds now for potential property upgrades. If your property is already at an EPC C rating, you may be safe, but if not, it’s worth reviewing the current EPC report and assessing which improvements will be required.

For those undertaking large-scale refurbishment projects, reaching a C rating should be more manageable. Working with a competent and knowledgeable consultant can help ensure compliance through thoughtful planning.

Exemptions for Landlords Who Can’t Meet the Requirements

The government has proposed a 10-year exemption for landlords who invest the full £15,000 but are still unable to achieve a C rating. However, the effectiveness of this exemption will depend on the guidance provided under the new EPC framework. More detailed instructions will be essential, unlike the current system, which often gives vague and impractical recommendations.

Will EPC Rules Be Fair? The Affordability Debate for Landlords

As sustainability consultant we agree strongly with the principle of improving energy efficiency, there will be concerns about affordability for some landlords. If the government pushes too hard, the PRS could face major disruptions, potentially reducing the availability of rental properties and leading to rent increases.

One possible solution is an affordability exemption, which would lower the investment cap from £15,000 to £10,000 per property in some instances. Preventing a sudden shock to the PRS.

The government is currently exploring different ways to structure exemptions, including:

• A council tax-based approach (factoring in the property’s tax band)
• A rent-based approach (considering the rental income of the property)
• A local authority approach (allowing councils to determine affordability based on regional factors)

It would be more sensible for the cap to reflect the profitability of the property. A council tax approach assumes that properties in lower bands are less profitable, but this is a weak indicator—council tax bands are based on historical property values, not current rental income. A rent-based approach would better correlate with profitability, as a property with low rental income will struggle to justify high upgrade costs. A local authority approach could consider regional market conditions, though it may lack the specificity needed for individual properties. Although they could feasibly include rent income to their discretion.

It’s clear that more feedback from landlords and stakeholders is needed to finalise these exemptions. If you have concerns or suggestions, it’s worth participating in government consultation by completing the Improving the energy performance of PRS questionnaire.

Stricter EPC Standards: Will They Fix the Housing Affordability Crisis?

The debate around stricter EPC regulations and affordability exemptions raises an important question: should we be pushing out landlords or could overly harsh policies create unintended consequences?

Stricter regulations could force out landlords who refuse to invest in energy efficiency, leading to a more sustainable and higher-quality rental market. Many properties in poor condition are owned by landlords who maximise profits while neglecting improvements, leaving tenants to endure cold, damp, and inefficient homes. Tightening EPC rules ensures that landlords must meet minimum standards, benefiting tenants and reducing long-term energy costs.

If landlords are unable or unwilling to upgrade and sell their property, it could lead to more properties being available for first-time buyers, making homeownership more attainable.

However, a sudden wave of property sell-offs could risk a collapse in house prices, affecting not just landlords but also homeowners who could see their asset values decline. Negative equity could leave some owners financially trapped. Furthermore, not all sold properties would necessarily go to first-time buyers—wealthier investors and large corporate landlords could consolidate ownership, leading to fewer small landlords and potentially higher rents due to reduced competition.

Another key concern although unlikely is rental supply. If many landlords leave the market without being replaced, there could be a shortage of available rental properties, pushing rents even higher.

A Just EPC transition in the private rented sector

A just transition in the private rented sector (PRS) would balance improved housing standards with affordability and fairness, ensuring that renters get warmer, more energy-efficient homes without excessive rent hikes while small landlords receive extra grace to meet upgrade costs. This could be achieved through gradual implementation, targeted grants or low-interest loans, and rent controls to prevent unfair cost-shifting. At the same time, stronger enforcement against negligent landlords would push out bad actors without destabilising the rental market. By protecting rental supply and encouraging tenant-friendly ownership models, such reforms could create a fairer, greener housing system for both renters and responsible landlords.

Have Your Say! 3 Questions from the Government EPC Consultation

The consultation document raises several important questions that landlords should consider. Some of the key questions include:

1. Do you agree with the government’s preferred approach of requiring properties to meet a primary standard based on the fabric performance metric, and then a secondary standard based on either the smart readiness metric or the heating system metric, with landlords having discretion over which secondary metric their property meets?

Resolve agrees with this approach, as a fabric-first strategy encourages low-energy and low-carbon design, thereby reducing demand. Lowering energy demand is crucial for electrification and reducing carbon footprints.

2. Do you agree with the government’s proposed £15,000 cap per property, allowing landlords to register an exemption if expenditure exceeds this amount?

Resolve takes the position that a landlord could feasibly be profiting £4,000 a year for 10 years. In some regard, they are externalising costs—placing the financial burden on the environment, future generations, and tenants at a time when the cost of living is disproportionately high. There should be stronger pressure to ensure landlords contribute to reducing the nation’s carbon footprint, fulfilling their duty to protect the environment and making their profits more sustainable.

3. Should the government develop an affordability exemption?

Yes, absolutely, and it should be based on profitability. There is a strong correlation between rental income and profitability. However, any profitability threshold that reduces the spending cap should consider that landlords can start saving for upgrades now, in 2025. For example, a property generating £450 in profit per month should be able to set aside enough funds to invest £15,000 in upgrades. Low-income properties could be expected to meet the initial lower cap limit, with further investment required in five to ten years’ time.

EPC Upgrades Made Easy: How Resolve Supports Landlords

The proposed changes to the EPC rating system represent a major shift in how property energy efficiency is assessed and regulated. While the new system may provide a more accurate assessment, it also carries significant financial implications for landlords. The requirement to upgrade properties to an EPC rating of C—potentially at a cost of up to £15,000 per property—could be challenging for many landlords, particularly those operating on tight margins.

Landlords and investors should be contributing to refurbishment funds now. Those who take proactive steps now will be in a stronger position when the new regulations take effect. Resolve has helped homeowners and investors allocate funds to the most cost-effective energy-saving interventions that will improve EPC ratings the most.

If possible, consider upgrading your property now to achieve an EPC C rating under the current system. Doing so will shield you from future changes and ensure compliance with upcoming regulations.

Additionally, consider participating in the government consultation to ensure your voice is heard.  At Resolve be believe these changes are coming, and preparation will be key to navigating them successfully.