Government Makes U-turn on Energy Efficiency for Rental Properties
The end of September saw a surprise government U-turn that positively affects landlords, at least for
the short term.
It’s been clear for some months that landlords have been feeling the pressure of increased interest
rates in addition to proposed changes in the Renters Reform Bill (which has had its first reading in
Aligned with some of these pressures has been a question mark over the government’s energy
efficiency policy. With their intention to deliver net zero carbon emissions by 2050, one of their
policies was to increase the minimum expectation of energy efficiency rating on rented properties
from grade E (currently) to grade C over the longer term. The original proposals were for this to be
implemented on new tenancies by 2025, then extended to existing tenancies by 2028.
Background: The original proposals
In 2018, the government changed the minimum expectations for EPCs in the Private Rented Sector
and legislated to ensure that properties had a minimum of grade E or above rating for all new and
existing tenancies. There are exemptions but accessing these requires an application to the PRS
Register, a separate body set up by the government to cover these matters.
The government have been looking at options across the whole of the housing sector, from
improvement measures on property sales through to social housing. However, it’s fair to say that the
Private Rented Sector has been an “easy target” as, from a political perspective, it’s easier for
government to pass the associated costs on, at least to some degree.
With this in mind, their proposals were as follows:
- All new tenancies agreed from 1st April 2025 have to meet grade C or above.
- All existing tenancies from 1 st April 2028 will have to meet the same requirements.
According to simplybusiness.co.uk, PM Rishi Sunak said that landlords will no longer need to upgrade
the energy efficiency of their properties, but the government will continue to “encourage
households to do so where they can”.
He said that the U-turn, which includes delaying plans to ban the sale of petrol and diesel cars, is to
reduce the impact of changes that “would have cost families upwards of five, ten, fifteen thousand
It’s now been over two years since the consultation closed, and the National Residential Landlords
Association (NRLA) said the government’s u-turn causes further uncertainty for landlords.
“The uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of
rented properties,” said Ben Beadle, Chief Executive of the NRLA.
“Landlords are struggling to make investment decisions without a clear idea of the government’s
direction of travel.
“It is welcome that landlords will not be required to invest substantial sums of money during a cost-
of-living crisis when many are themselves struggling financially.
“However, ministers need to use the space they are creating to develop a full plan that supports the
rental market to make the energy efficiency improvements we all want to see.”
You can see the full article here .
Our view at Nicol & Co
This information should come as welcome news for landlords. We’ve analysed the local area on this
point and concluded that a large number of Worcester’s Victorian and 1930s suburbs would have
been affected by such a move, including the Arboretum (mostly D Grade EPCs), areas of St Johns as
well as the Bath and London Roads. This is before we even consider the Georgian properties in
Malvern or the farmhouses in some of the county’s more rural areas.
This will give flexibility for landlords to consider keeping hold of investments a little longer to
maximise value in the longer term whilst we are operating in an ever-changing sales market.
Additionally, if you are a potential landlord with minimal mortgage obligations then now could be an
excellent time to buy, with opportunities for more offers and the strongest rental yields in a long
time due to consistent supply and demand issues.
The impact will hopefully lead to more investment and a cooler rental market over the long term.
Landlords need to think with some caution that this could become a factor again in the future with
lots of unknowns compounded by the potential outcome of the next election, expected next year.