A new study from Eurocell has laid bare a stark reality for England’s property market: over half of the nation’s homes—some 9.3 million—languish at a D rating or below on the Energy Performance Certificate (EPC) scale, far short of the C rating landlords must hit by 2030 under Labour’s latest regulations.
With just 0.3% of properties boasting an A rating, the scale of the challenge is clear, and it’s homeowners and landlords who’ll foot the bill—estimated at £6,100 to £6,800 per property for upgrades like insulation, double glazing, and new boilers.
The push aims to slash tenant energy bills by £240 a year while lifting housing standards, but the price of compliance is stirring unease.
David Hannah, Group Chairman of Cornerstone Tax, warns of a brewing storm: “Whilst increasing the energy efficiency of properties is something that we would all agree is a desirable thing to do, forcing costs onto landlords to upgrade their properties at a time when their margins have been eroded by tax relief cuts, is an unnecessary additional compliance cost.”
He reckons the average £6,500 outlay could backfire, sparking rent hikes that outstrip those energy savings.
“Spending £6500 on average to improve energy efficiency would be regarded as an improvement which will be reflected in rent increases, as the property is now more attractive and the landlord will have to achieve a return on his capital investment,” he explains. “This is assuming a 6% yield then this would result in a rent increase of £390 a year. If renters are only saving £240 a year on fuel bills then this is a net loss to the renter of £150! In actual fact, national yields are between 5% and 8% so the true loss would be between £85 and £280 depending on area.”
The ripple effects could hit harder still. With a proposed £15,000 spending cap per home on the table, many landlords might balk at the costs, opting to sell off less efficient properties instead.
Hannah sees trouble ahead: “It seems to be a recipe for a complete collapse in the availability of the rental stock in this country, at a time when affordability for purchase is still at an all-time low.”
Cornerstone’s data backs this up—19% of tenants have moved five times in five years as landlords exit or pass on soaring mortgage costs, while 17% lose out in rental bidding wars.
The wider market isn’t offering much relief either. House prices in England and Wales rose 43% from 2015 to 2024—a slower climb than the 64% jump between 2013 and 2022—leaving homeowners grappling with sluggish equity growth.
Throw in rising mortgage rates and stamp duty, and the ladder’s looking tougher to climb. Hannah ties it all together:
“This has been reflected in the falling number of new builds which have been started since the election of this government who set increased house building targets! Demand for rental property will therefore remain steady or even increase as available stock is falling.”