Under current rules in England and Wales, private landlords cannot legally rent out their property without an Energy Performance Certificate (EPC) with a minimum rating of E, while social landlords are not subject to any minimum energy efficiency standard.
Previously, the Conservative government had proposed making it mandatory to achieve a minimum EPC rating of C by 2025 for new tenancies and 2028 for existing ones, but this policy was scrapped a year ago due to concerns that upgrades would cost too much.
Now, the new Labour government is set to bring the EPC upgrade enforcement back, but with an extended deadline of 2030 for all rental properties to have a rating of at least C.
Around 1/3 of rental properties were constructed before 1919, many of which have solid walls, which will be difficult to bring up to the minimum energy efficiency rating – but without the compulsory upgrade, these properties cannot be legally let to tenants from 2030.
So, what does this mean for landlords right now, and is there any financial support available?
EPC grant conditions
New funding has been announced to help some landlords with older properties, but this will not be available for all landlords, as it depends on the property’s rating and location.
From April 2025, the government will make grants of up to £30,000 available for landlords to upgrade one property. This will be split into £15,000 caps each for upgrading energy efficiency to a C rating and installing low-carbon heating systems (such as solar panels or heat pumps).
For second or subsequent properties, the total grant will be capped at £15,000, with the landlord required to contribute at least the same amount themselves.
There currently is no limit for the number of properties that a landlord can claim grants for, but the maximum funding each landlord can claim is £315,000 altogether.
To qualify, a rental property must meet at least one of the following criteria:
- Currently has an EPC rating between D to G
- Let to low-income tenants either receiving means-tested benefits or with an annual family income below £36,000 a year
- Located within an eligible postcode area with older housing stock
The latter is a kind of postcode lottery covering around half of postcodes in England and Wales, identified as more ‘deprived’ areas with many pre-1919 properties that are costlier to upgrade.
Required EPC upgrades
Whether you make use of the grants or fund energy efficiency improvements yourself, the government expects landlords in England and Wales to invest in the following upgrades:
- Energy performance – insulation, draughtproofing, double or triple glazing, smart controls
- Low carbon heating – heat pumps, high retention storage heaters, solar panels
More details about this scheme can be found in the Warm Homes: Local Grant guidance.
At the moment, landlords might prefer to wait for further clarification before taking action, as the government needs to consult on how assessments and exemptions will work.
After the grant scheme opens to expressions of interest on 1st April 2025, the government expects to operate it for at least 3–5 years, up until the 2030 deadline for EPC upgrades.
Some landlords may prefer to sell up rather than make significant financial investments in improving the energy efficiency of their properties, as this ‘capital expenditure’ is not tax deductible – meaning it cannot be written off as maintenance to reduce taxable profits.
However, while the upfront costs are considerable, an energy efficient property will not only be more attractive to tenants, but will also increase in value for whenever you decide to sell it.
If you are a landlord looking for financial advice to help you optimise your operating costs, from tax planning to managing Service Charge Accounts, we can help here at gbac.
To speak to our team of Barnsley accountants about our range of services, please call 01226 298 298. Alternatively, you can send an email to info@gbac.co.uk and we’ll get back to you.