Residential landlords in England and Wales could face a potential bill of £21.6bn to meet the government’s new EPC requirements, according to data published by Knight Frank.
Last week, the government confirmed that all PRS properties across England and Wales must reach an EPC C minimum rating by 2030, up from the current requirement of EPC E.
Knight Frank compared the EPC certificates of more than 31,000 homes in the PRS that have improved their home energy performance in the previous five years, pre-and post-improvement.
Utilising the data of improvements undertaken for PRS properties and fixed costs provided by CoreLogic, whose retrofit service, Ecofurb, provides assessment through to installation for energy efficiency refurbishments, the average cost of implementing these as of January 2025 would be £8,148. This varies depending on numerous factors, including the size, age and existing efficiency rating of a property.
With around 60% of the five million PRS households in England and Wales currently rated EPC D and below, the total cost would be an estimated £21.6bn.
Flora Harley, head of ESG research at Knight Frank, said: “This policy is not new. What needs to be different this time is a firm commitment that also sets out how the government is going to deliver this with both carrot and stick. Previous attempts have seen limited uptake for efficiency improvements and the recent news about the quality of wall insulation delivered is unlikely to help confidence in this. A clear, well thought out and holistic approach is required. Finance also has a crucial role to play in enabling upgrades to be made. The discussion around property linked finance could further enhance this.
“Across the private rented sector there has been a notable reduction in rental supply in recent years: there are still 34% fewer homes listed to rent across the UK compared to the 2017–19 average, although a rise in build-to-rent is helping to alleviate some of this.
“The proposed MEES regulations mean landlords who fall below the EPC C threshold will have to make a choice between upgrading existing homes to the new standard or exiting the sector which could see supply further contract in the coming years. Longer term, we expect the new homes market will stand to benefit, given higher building and efficiency standards which will be more attractive to new investors than non-compliant older stock.”
Gary Hall, head of lettings at Knight Frank, added: “Landlords are consistently tackling a series of evolving requirements from the government. Many are not making a profit on their rental property, making it challenging to fund substantial improvements without clear guidance on implementation options and financial support. To make meaningful progress in improving energy efficiency, landlords need assurance from the government that there will be grants available and a cap on the amount they will be required to spend. Introducing tax breaks for energy efficiency improvements would be a great way to support landlords and in turn, help the government achieve its targets.
“Bringing homes up to a good EPC level is in everyone’s best interests, but it can’t be at the detriment of the number of available properties on the rental market, which is reducing yearly. We must encourage investment in this sector, not force landlords to sell due to further margin erosion.”
