At the current pace of energy efficiency improvements, it will take landlords another 18 years to bring all privately rented homes in England and Wales up to an Energy Performance Certificate (EPC) rating of A to C, according to data from Hamptons.
This timeline extends well beyond the government’s ambition of a 2030 target, though it marks a vast improvement from the 89-year projection based on 2016 rates.
The acceleration in upgrades is partly due to landlords making improvements in anticipation of now-scrapped Conservative energy efficiency plans. Despite this, the current rate of progress remains insufficient to meet the expected 2030 regulations, which would require around 340,000 rental homes to upgrade annually.
In 2024, only about 115,000 homes are expected to meet the necessary EPC standards, indicating that the rate of upgrades needs to triple to stay on target.
So far this year, 39% of EPC assessments on rental properties resulted in a higher band rating, although this improvement rate is below levels seen before the 2018 requirement for properties to achieve at least an EPC E rating.
Over half (55%) of rental homes that received new EPC certificates this year achieved a C rating or better, compared to 48% of owner-occupied homes.
Most homes improving their EPC ratings this year moved from a D to a C rating, with 50% of previously D-rated homes reaching at least a C upon reassessment. However, only 9% of homes previously rated as C managed to achieve a B rating or above, highlighting the difficulty of significant upgrades.
Despite progress, a small percentage of rental properties are unlikely to meet the A-C rating threshold. Between 3-4% of rented homes are expected to fall short of this standard, down from 7-8% before a mid-2022 change in EPC methodology. The new methodology benefits electrically heated homes, often pushing them into higher EPC bands.
Older, cheaper properties in the North of England are particularly challenging to upgrade, and these homes tend to generate higher rental yields. In 2024, EPC D-rated homes averaged a gross yield of 7.6%, compared to 5.5% for newly built, EPC A-rated homes. EPC E-rated properties achieved the highest yields at 7.9%, but their value and construction often make achieving an EPC C rating unviable or impossible.
Aneisha Beveridge, head of research at Hamptons, said: “Successive changes to proposed energy efficiency rules have shifted the goalposts for landlords, some of whom face costs which can run into tens of thousands of pounds.
“Despite this, many investors have continued to improve the energy efficiency of their rental homes and we’re currently on track to see 100% of rental homes where an EPC A-C is viable, reach that rating within a generation.
“To meet the government’s 2030 target, the same number of homes will need to see energy upgrades over the next five years as we’ve seen make improvements in the last 30 years.
“While a requirement for all rental homes to achieve an EPC A-C rating by 2030 is achievable at a stretch, landlords need adequate time and resources to meet it. It is essential landlords receive complete clarity on this target this year.”
