Landlords will be forced to upgrade their properties at significant cost if they fail to meet tougher energy efficiency standards under the government’s Warm Homes Plan, prompting warnings that the changes could drive smaller landlords out of the rental market.
Under the new rules, all privately rented homes must achieve an Energy Performance Certificate (EPC) rating of at least C by 1 October 2030. The maximum amount landlords will be required to spend on improvements has been reduced from £15,000 to £10,000, with a further cap of 10 per cent of a property’s value where that value is below £100,000.
However, industry specialists say the revised EPC framework could make compliance harder and more expensive than many landlords anticipate. Under the forthcoming Home Efficiency Model, properties are unlikely to achieve an EPC C rating unless they also meet the new Heating System Metric, which prioritises low-carbon heating solutions such as heat pumps, electric heating systems or thermal storage.
In addition, the Smart Readiness Metric will require properties to have solar panels or a smart meter, although exemptions may apply in certain cases, including for some listed or hard-to-adapt buildings.
Landlords currently benefit from a zero rate of VAT on energy efficiency improvements, but this is due to rise to 5 per cent from April 2027, adding further cost pressure ahead of the 2030 deadline.
The announcement follows warnings from Nationwide that tenants could face higher rents during 2026 as landlords seek to offset rising compliance and borrowing costs.
Omer Mehmet, managing director at Trinity Finance, said landlords need urgent clarity from ministers.
“Raising energy standards is the right long-term goal and will ultimately mean lower bills and better living conditions,” he said. “But requiring EPC C by 2030 under evolving metrics creates uncertainty and real cost pressures, particularly for older housing stock. Without clarity and time to plan, the risk is reduced supply and higher rents rather than a smooth transition.”
Michelle Lawson, director at Lawson Financial, described the changes as a “bitter pill for landlords to swallow”.
“The knock-on effect for the most vulnerable in society will be less housing choice and higher rents as landlords try to pass these costs on,” she said. “Smaller landlords may simply decide to exit, leaving the sector increasingly dominated by large corporate operators.”
Lawson warned that landlords should already be reviewing their portfolios and funding options, noting that increased demand for tradespeople and materials could push upgrade costs even higher.
For some landlords, the reforms are already prompting plans to sell. Kate Allen, owner of Finest Stays, said the changes were pushing her towards exiting the sector.
“As a landlord of an HMO in London, this seriously pushes me towards selling up,” she said. “The financials don’t justify spending thousands to comply with constantly changing rules. The likely outcome is less rental stock, higher rents and more pressure on tenants.”
Concerns were also raised about the durability of the policy framework. Kundan Bhaduri, entrepreneur and landlord at The Kushman Group, said landlords risk spending heavily on upgrades that may later be deemed insufficient.
“Mandating EPC C by 2030 while warning that measurement metrics will change is forcing landlords to invest now in upgrades that could be rendered worthless by future rule changes,” he said. “The £10,000 cap is a token gesture and does little to address the reality of retrofitting older homes.”
Critics argue that unless the government provides greater certainty, financial support and a realistic pathway for compliance, the policy could accelerate a further contraction in the private rented sector.
While ministers say the reforms are essential to cut emissions and reduce household energy bills, landlords and advisers warn that without careful implementation, the result may be fewer rental homes, higher rents and increased pressure on an already strained housing system.
