With our homes responsible for nearly 20% of the UK’s carbon emissions, in their drive for net zero, the government has prioritised making them more energy efficient. It’s the Private Rental Sector (PRS) that has been targeted first. From 2025, rental properties will be required to achieve an EPC rating of at least ‘C’ for any new tenancies and, from 2030, the rules will be extended to include all existing tenancies. To ensure maximum compliance, there will be fines of up to £30,000 for landlords who fail to bring their properties up to spec.

Complying will be no small task – two-thirds of privately rented properties in England and Wales are currently rated below an EPC ‘C’ grade. And the money involved will be considerable, too – for 46% of the PRS, meeting the new minimum energy efficiency threshold will cost somewhere between £5,000 and £9,999. 30% could do so for under £5,000, but 19% would need to pay £10,000 to £14,999 and 5% would have to stump up over £15,000. There are suggestions, though, that there will be a £10,000 price cap on the required spend (source: The English Housing Survey).

The proposed new rules have resulted in some considerable speculation as to whether, on top of rising mortgage costs, large numbers of landlords might decide to sell up rather than pay for expensive improvement works. Rightmove has now produced figures that support that speculation. According to their research, 40% of small-scale landlords are more likely to sell than make the required changes. With the lack of rental stock already a serious problem and rents rising to record levels, an exodus of landlords (and their properties) would be bad news for tenants, who would face even higher rents and even less choice.

However, it all might be about to change, once again. The Conservative Party’s unexpected by-election victory over Labour in Uxbridge was believed to be the result of a protest vote against Sadiq Kahn’s ULEZ expansion. With a general election looming, the government has therefore decided to undertake a rapid reassessment of their entire approach to net zero, especially any green policies that take money out of voters’ pockets. And that very much includes the rental sector. In a recent interview with the Telegraph, Housing Secretary Michael Gove said there might, at the very least, be a delay in the new C band energy efficiency requirements. He admitted that the Government may be ‘asking too much too quickly’ of landlords, then added: ‘I think we should relax the pace,’ He didn’t say, though, by how much or by when.

In a separate interview, this one with senior Whitehall figures, the Financial Times was told that Gove’s new softer approach had the full backing of Prime Minister Rishi Sunak and, in addition, there would be a fundamental review of the entire EPC system. Since their introduction, EPCs have been heavily criticised for both the inaccuracy of their assessments and their inconsistency. They were originally devised ‘as an informational tool to meet the specific requirements of EU membership’. Post-Brexit, it is now possible to make changes, although there are no details yet on what those changes might look like. Landlords should therefore be very wary about making expensive energy efficiency improvements until the full details become clear.

Overall, the government’s change in tack hints at a more benign approach to landlords. And, if they are serious about tackling the UK’s soaring rents, they may well have to go one step further and consider restoring landlords’ tax relief on their mortgage payments, too.