On Wednesday, the government announced its Warm Homes Plan, which sets out how UK homes will be made cheaper to heat, produce lower carbon emissions and reduce our need for gas.
As part of this, the Department for Energy Security and Net Zero (DESNZ) confirmed that minimum energy efficiency standards in private rented homes will be increased, and provided the detail of this after consulting on proposals last year.
This could raise the proportion of private renters living in well-insulated homes from 48% to 84%, but, despite our campaigning, the government has watered down the original proposals, meaning many renters will be stuck in fuel poverty.
The Basics
Right now most private landlords must provide tenants with an Energy Performance Certificate (EPC) which looks at the insulation and heating type, and estimates how much energy the home is likely to use and therefore how expensive it is to heat. The EPC provides an energy efficiency rating of between A and G (A being the most energy efficient).
Since 2020, a private rented home must be rated E or better, unless it qualifies for an exemption, e.g. the landlord would have to spend more than £3500 to make the necessary improvements.
But most private renters (52%) still live in homes rated D or below, which are still hundreds of pounds more expensive to heat per year than C+ rated homes, and more susceptible to damp and mould problems. Our polling last year found over 3.6m renters are living with mould or damp. Nearly 1m private renter households are on low incomes and in homes rated D or below, so are considered to be in fuel poverty.
Crucially, because landlords call the shots, there’s little tenants living a home like this can do about it. So the government is beefing up the requirements by raising the minimum standard to EPC C, which landlords will need to meet by October 2030. Landlords who break the rules can be fined up to £30,000.
The minimum standard and timescales
The system of EPCs is nearly two decades old, and there are major concerns about certificates’ accuracy, the potential for fraud, and how good they are at encouraging lower carbon emissions. So big changes are happening to the certificates as well. That means the minimum standard will vary depending on when the energy assessment was done and the certificate issued.
The main thing to know is that for both systems, the priority will be for improvements in the insulation of the home – i.e. double glazing and insulation in the loft and walls. The new system will encourage landlords to make homes “smart ready” or install green heating systems like heat pumps. For the latter they’ll be able to apply for a grant to make this easier.
To avoid a panic in 2030 as the deadline looms, which installers won’t be able to cope with, landlords will be able to comply under the current system if they do the work by October 2029, which the government describes as “grandparenting”. That should help to spread the workload of the improvements over the next 4-5 years after the government dropped the original plan to have new tenancies meet the new standards by 2028.
Exemptions
The government has also set the maximum landlords need to spend to bring their homes up to EPC C (aka the cost cap) at £10,000 for work that takes place after October 2026. If they do this and the home is still not a C then they can get an exemption.
The government’s 2025 proposals had suggested a cap of £15,000 instead, which, based on English Housing Survey data, would have meant 2.30m homes would have needed to be upgraded, leaving just 158,000 exempt. This lower cap makes a further 395,000 homes exempt.
But it gets worse. Other exemptions include:
- Homes worth less than £100,000 – instead the cost cap is 10% of the property value, so e.g. if the home is worth £60,000 the landlord would only have to spend £6,000 on improvements. A particular problem with this is that low value homes tend to be in the north, and fuel poverty rates are higher in the North West and Yorkshire.
- Homes where the landlord has already made all reasonable improvements and the home still falls short of a C.
- Homes where the only option to meet a C either costs more than £10,000 or is solid wall insulation – which has had a hit to its reputation after a spate of botched installations.
- Homes that would lose 5% of value after the necessary installations.
All these exemptions add up – the government expects the new rules to result in 1.75m homes upgraded, and 415,000 private renter households lifted out of fuel poverty. But that will leave around 707,000 homes at EPC D-G and 578,000 households left in fuel poverty (who by definition will be in D-G homes). There’s no question that these changes will improve standards for many – but it’s a real concern that those who lose out will predominantly be those renters most in need.
There is a large fund for improvements, so we’ll be working to make sure that this is used as far as possible to help those renters whose landlord could be exempt from meeting minimum standards.
There is also an exemption where the tenant has said they don’t want the work to be carried out because of the disruption to their lives that this might cause. We’re concerned that landlords could bully tenants into saying this, so this will have to be monitored closely.
Energy Performance Certificates
As mentioned above, the EPC system is also being shaken up. There is some good news in that the government has committed to having the certificates provide more useful information about estimated energy use and potential energy costs, factoring in changing prices. If designed well, it will mean renters will be able to compare properties with different ratings more easily. For example, Home A listed at a higher rent than Home B might work out as a better deal if the estimated energy bills are a lot lower than for Home B – but it is hard to work this out reliably from the current EPC system.
In addition, some homes such as historic buildings and houses in multiple occupation (HMOs) aren’t currently required to have an EPC, but will be under the new system. This will mean renters will be able to make more informed decisions when looking for a new home.
Rents
The costs involved in making energy efficiency improvements mean that there are real concerns about landlords essentially cancelling out any bill savings by raising the rent. Ed Miliband, the Energy Secretary, was asked about this in the House of Commons when announcing the plan, and said that because many landlords were already making improvements, and many landlords would qualify for financial support for doing so, this wasn’t a big concern for him. We’re not so sure.
Under the Renters Rights Act, it will be easier to challenge rent increases, and the tribunal, which makes the decisions, takes quality of the property into account. That means poorly insulated properties should get a discount compared to similar properties nearby that are C-rated. But that also means the tribunal will reward landlords who make improvements with a higher rent.
We don’t think it is reasonable for landlords to raise the rent by a large amount in one go, which the system would allow, as this risks pricing renters out of our own homes. Instead, rent rises should be limited to the lower of wage growth or inflation, which will still allow landlords to recover investment costs over time.
It is particularly important that landlords who get public money to make improvements can’t benefit personally from that by raising the rent, given that the purpose is to reduce the tenant’s cost of living. Our campaigning managed to persuade DESNZ to make landlords getting grants to declare that they wouldn’t raise rent as a result of improvements – but, as things stand, it’s not possible for renters to enforce this at the tribunal. If it were, then more renters would have confidence to apply for grants in the first place.
