Holiday lets have been spared tougher energy efficiency rules under the government’s Warm Homes Plan, prompting relief across the self-catering and short-term rental sector — and anger among residential landlords who will still be required to upgrade their properties.
Under the decision, holiday lets and short-term self-catering accommodation will be excluded from the Minimum Energy Efficiency Standards (MEES) regime. Owners will not be required to achieve a minimum Energy Performance Certificate (EPC) rating of C in order to continue operating.
The proposal had also included a requirement for owners to spend up to £15,000 attempting to reach EPC C, even where improvements were impractical. That spending requirement has now been dropped entirely for the holiday let sector. Properties will still need to hold a valid EPC, but no minimum rating will apply.
By contrast, residential landlords will be required to upgrade their properties to at least EPC C by 2030, a move that many in the private rented sector have described as a “bitter pill to swallow”.
Industry figures argue that MEES was designed to address fuel poverty, a problem linked to long-term residential housing rather than short-term holiday accommodation.
Kate Allen, owner of Kingsbridge-based Finest Stays, said the exemption was “fantastic news” for the industry.
“This is genuinely fantastic news, and a decision I wholeheartedly support,” she said. “Applying the same rules to holiday lets risked unnecessary cost, reduced supply, and yet more pressure on tourism-dependent areas.
“This provides much-needed clarity and avoids piling disproportionate regulation onto a sector already facing significant headwinds, increased national insurance, higher tax on property income, DAC7 reporting, potential mansion tax changes, Making Tax Digital, rising business rates, the abolition of furnished holiday lets, council tax premiums, incoming statutory registration and the prospect of a tourist levy.
“Had this gone the other way, it could realistically have been the straw that broke the holiday-letting sector’s back.”
Joe Stallard, director and adviser at Devizes-based House and Holiday Home Mortgages, said the exemption was the right call.
“Excluding holiday lets from MEES is overdue good news for a sector that adds billions in gross value added to the UK economy,” he said. “Holiday accommodation isn’t linked to fuel poverty in the way long-term housing is, so applying the same rules never felt appropriate.
“Removing the EPC C requirement and the £15,000 spend takes away huge uncertainty and gives owners confidence to keep operating at a time when rising regulation and costs are already taking a toll. Owners can now improve sensibly rather than under pressure.”
However, residential landlords have criticised the decision as inconsistent and unfair.
Kundan Bhaduri, a landlord at London-based The Kushman Group, said the exemption undermined the government’s environmental rationale.
“If I own a Victorian terrace with an EPC rating of D, which is the median for English housing stock, I now face a bill of up to £10,000 to upgrade it for a long-term tenant,” he said. “That is capital that yields no additional rent because local wages, not insulation thickness, determine rents.
“Yet if I remove that family and let the same drafty property as a holiday let, my compliance cost is zero. If this policy were truly about net zero, emissions would matter regardless of who is staying in the property.
“By exempting short-term lets, the government has effectively admitted that its green agenda is secondary to reshaping the private rented sector.”
The decision highlights growing tension between housing, environmental and tourism policy, as ministers attempt to balance net zero ambitions with economic realities across different parts of the property market.
While the holiday let industry has welcomed the clarity, residential landlords warn the divergence in treatment could accelerate the shift from long-term rentals to short-term accommodation — potentially reducing housing supply and increasing pressure on tenants.
