For landlords across England and Wales, energy efficiency is becoming an increasingly important consideration when deciding whether to keep, improve or sell a rental property.
The government has confirmed plans for a higher minimum energy efficiency standard for privately rented homes, with the new requirements due to apply from 1 October 2030.
For some landlords, the changes may mean investing thousands of pounds into properties that are currently below the required standard.
For others, particularly owners of older, hard-to-improve properties, the new rules could make selling the property an attractive option.
If you’re a landlord considering selling a property, now could be a good time to understand exactly what the changes could mean for you.
The government has confirmed that private landlords will be required to meet a higher energy efficiency standard from 1 October 2030.
The current minimum standard remains EPC E for privately rented properties until the new requirements come into force.
Under the future framework, landlords will need to invest in energy efficiency improvements to bring properties up to the required standard.
The government has confirmed a £10,000 maximum cost cap per property, meaning landlords can be required to spend up to £10,000 on relevant improvements. If the property still cannot meet the required standard after that investment, an exemption may be available.
This is particularly relevant for landlords with older properties, properties with solid walls, or homes where substantial refurbishment would be required.
The confirmed compliance date for the higher standard is:
1 October 2030
Landlords therefore have time to plan, but the changes are significant enough that property owners should not necessarily wait until 2029 or 2030 before considering their options.
The government has also confirmed that properties achieving EPC C or above under the existing EPC rating system before 1 October 2029 can receive transitional recognition under the future standard until their EPC expires.
One of the most important changes for landlords is the introduction of the £10,000 cost cap.
Under the future rules, landlords will generally be expected to invest up to £10,000 per property in relevant energy efficiency improvements.
This could include measures such as:
If the landlord has spent £10,000 and the property still does not meet the required standard, a cost-cap exemption may be available.
The government says the exemption will be valid for 10 years.
However, £10,000 is a substantial amount of money.
For a landlord with a £100,000 rental property producing £7,000 or £8,000 a year in rent, spending £10,000 on improvements could represent a significant proportion of the property’s value.
And that is before considering other landlord costs such as:
This is why landlords should look at the economics of each property individually.
The government has confirmed a number of exemptions that may apply where a property cannot reasonably be brought up to the required standard.
However, an exemption is not simply an automatic way of avoiding the EPC requirements.
Landlords will need to satisfy the relevant criteria and, where required, provide supporting evidence and register the exemption.
The future framework includes several important exemptions.
If a landlord has invested up to the £10,000 cost cap and the property still does not meet the required standard, a cost-cap exemption may be available.
This is expected to last for 10 years.
A new solid wall insulation exemption has also been confirmed.
This is particularly relevant to landlords who own older properties constructed with solid walls.
Under the new framework, landlords will be able to register an exemption where the property remains below the required fabric standard and the landlord chooses not to install solid wall insulation.
The government has recognised concerns around the suitability of solid wall insulation, including the potential for damp and mould problems if insulation is not installed correctly.
For landlords with older housing stock, this could therefore be an important consideration when assessing future refurbishment costs.
Another important area for landlords is the negative impacts exemption.
This is designed to provide flexibility where installing a particular energy efficiency measure could have a negative impact on the property.
The government has confirmed that the exemption can cover circumstances where landlords can provide evidence that an improvement could negatively affect the property’s fabric or structure.
It can also cover situations where an improvement would devalue the property by 5% or more.
This could be particularly relevant to older or traditionally constructed properties.
Landlords should not simply assume that saying “the work could cause problems” will be sufficient.
Professional evidence may be required.
For example, evidence could demonstrate that proposed works could:
The current government guidance also provides for evidence from suitably qualified professionals in relation to certain wall insulation issues.
For devaluation, the existing guidance requires an independent RICS-registered valuer’s report demonstrating that specified measures would reduce the property’s market value by more than 5%.
Not necessarily.
Every property and landlord’s circumstances are different.
For some landlords, investing £5,000–£10,000 into a property may make perfect financial sense if it improves the EPC, increases rental value, reduces future maintenance requirements and protects the property’s long-term investment potential.
For other properties, particularly older homes requiring extensive work, the numbers may look very different.
A landlord could potentially be faced with:
At that point, it is worth asking a simple question:
Is this still the best property for my investment strategy?
There are several reasons why landlords may choose to sell before the new EPC requirements come into force.
If a property is likely to require substantial investment, selling now could allow a landlord to release capital rather than spending it on refurbishment.
Older properties can require considerably more maintenance and management.
Selling a difficult property can allow landlords to concentrate their portfolio on properties that are easier and cheaper to operate and have better EPC ratings.
Selling can release capital that could potentially be used elsewhere.
Landlords shouldn’t assume that every property affected by the EPC changes will suddenly become difficult to sell.
However, properties requiring significant expenditure may become more complicated to assess as the 2030 deadline approaches.
Getting an independent valuation and understanding the likely refurbishment requirement now gives landlords more options.
Before making a decision, landlords should consider:
If you wouldn’t buy the property today, it may be worth considering whether you should continue owning it.
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If you’re considering selling because of EPC requirements, refurbishment costs, increasing regulation or simply because you want to release your capital, we can provide a straightforward valuation.
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