Most Landlords Unable to Afford EPC Upgrades, Research Suggests
Government plans to require all privately rented homes to meet a minimum Energy Performance Certificate (EPC) rating of C are financially unviable for most landlords, according to recent research.
Under the proposed changes, landlords would be expected to spend up to £15,000 per property to bring homes up to the new minimum energy efficiency standard. However, analysis of landlord finances indicates that the majority are unable to fund upgrades at this level.
The research suggests that the maximum amount most landlords can realistically afford is around £7,700 per property, approximately half of the anticipated cost required to meet the proposed standard.
Funding gap raises concerns
The findings come amid wider concerns over funding support for energy efficiency improvements. Recent budget measures have reduced overall funding for energy efficiency schemes by around a quarter over the course of the current parliamentary term, limiting the level of financial assistance available to property owners.
This reduction has intensified concerns that landlords will be expected to absorb the full cost of upgrades at a time when many are already facing higher taxes, increased borrowing costs, and rising compliance expenses.
Risk to rental supply
While there is broad support across the sector for improving the energy efficiency of rented homes, the research highlights a growing disconnect between policy ambition and financial reality.
Without meaningful financial support, there is a risk that some landlords may be unable or unwilling to carry out the required works. This could lead to properties being withdrawn from the private rented sector, reducing available rental supply and placing additional pressure on tenants.
The assumption that landlords can fund substantial upgrades from existing reserves does not reflect the financial position of many smaller or highly leveraged investors, particularly those with older housing stock requiring extensive improvements.
Call for targeted support and tax reform
The research underlines the need for a clear and practical support framework if minimum EPC standards are to be successfully implemented. This includes targeted grants, affordable finance options, and tax incentives designed to encourage proactive investment in energy efficiency.
Without reform to the current tax system, which offers limited encouragement for capital improvements, landlords may struggle to justify large-scale upgrades, even where long-term environmental benefits are clear.
Balancing sustainability and viability
Improving the energy efficiency of the UK’s rental housing stock remains a key policy objective, both to reduce carbon emissions and to lower energy costs for tenants. However, the research suggests that progress will depend on balancing environmental goals with economic viability.
A collaborative approach involving government, lenders, and the rental sector may be required to develop a workable pathway to higher EPC standards, ensuring that homes can be upgraded without destabilising the private rented market.
