Hamptons, a division of Connells, projects that it will take up to 18 years for all private rental properties to meet the required EPC rating of C or above. The agency’s research suggests that, under the Labour party’s proposed regulations, rental homes won’t be compliant with these new energy efficiency standards until around 2042. This timeline highlights the significant delay in achieving the proposed improvements in energy performance.
Previously, the Conservative government had aimed to enhance energy efficiency requirements for rental properties, mandating that all private rentals achieve a minimum EPC rating of C. However, this initiative was halted in 2023, leaving the future of energy efficiency in rental properties uncertain.
The delay in implementing these standards underscores the challenges in upgrading the energy efficiency of the rental housing stock. As the deadline for compliance extends, landlords and tenants alike will face continued uncertainty regarding the future of energy efficiency regulations and their impact on the rental market.
Energy Security and Net Zero Minister Ed Miliband has announced that the government will reinstate the targets for energy efficiency in private rental homes. The new goal is for all rental properties to achieve an EPC rating of C or above by 2030. This move aims to address concerns about the energy performance of rental homes and improve their overall efficiency.
Hamptons, a leading lettings agency, reports that so far this year, 39% of EPC assessments conducted on rental properties have resulted in these homes moving to a higher energy band. While this figure represents a positive shift and is above the long-term average, it is still below the rates of improvement seen in the years leading up to 2018. In that period, there was a significant increase in energy upgrades following the introduction of the requirement for an EPC rating of at least E.
To meet the proposed 2030 target, substantial progress will be needed each year. Specifically, around 340,000 rental homes must make the necessary energy efficiency improvements annually to achieve at least an EPC C rating. This represents a considerable increase in the rate of upgrades compared to the current pace of improvement.
For 2024 alone, it is estimated that approximately 115,000 rental homes will achieve an EPC C rating. This number highlights the challenge ahead, as the rate of upgrades will need to increase significantly. The expected growth rate is threefold each year to ensure that the 2030 target can be met.
The government’s renewed focus on energy efficiency in rental properties underscores the importance of addressing this issue. Meeting the 2030 target will require coordinated efforts from landlords, tenants, and policymakers to ensure that all private rental homes meet the necessary energy performance standards.
So far this year, over half (55%) of privately rented properties that received a new EPC certificate achieved a rating of C or higher. This figure is notably better compared to 48% of owner-occupied homes that reached the same standard. The focus on meeting the EPC C rating is becoming increasingly important, particularly in the rental sector. As a result, rental properties that have been reassessed are most likely to have moved from a D rating to a C rating.
Specifically, 50% of homes that were previously rated D have successfully achieved at least a C rating upon reassessment this year. Additionally, 29% of properties that initially had an EPC E rating have improved to a C rating or higher. This data highlights a significant improvement in the energy efficiency of rental homes, indicating progress towards meeting new standards.
However, despite these positive changes, only 9% of homes that originally had an EPC C rating have moved up to a B rating or better. This shows that while many properties are meeting the minimum required standard, advancements to higher efficiency ratings beyond C remain limited. The slow pace of improvement in these higher ratings suggests that further efforts will be needed to achieve more significant upgrades in energy efficiency.
In 2024, among homes that received a new EPC rating, 39% improved to a higher band, 48% remained the same, and 13% fell into a lower band. Current data indicates that between 3-4% of rented homes might not be able to achieve an EPC rating of A-C.Â
This is an improvement from the 7-8% figure seen before the EPC methodology changed in mid-2022. The updated methodology reduced the estimated environmental impact of electrical appliances, which sometimes resulted in homes heated by electricity rather than gas moving to higher bands. Consequently, EPC ratings issued before 2022 may now differ under the new system.
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