There’s another major shift in regulation expected for landlords and it’s not getting nearly as much attention as it should.
EPC rules.
They’ve been talked about for years, delayed, debated, softened… but the direction of travel is now very clear. In January 2026, the Government unveiled their new Warm Homes Plan which sets out how they will cut energy bills and upgrade homes.
If you own rental property, this is willl be one of the biggest long-term changes you need to be planning for.
So here’s a clear, practical breakdown of what’s expected, and what it means in reality.
First, what’s likely to change?
The government’s direction is that all rental properties will need to achieve a minimum EPC rating of C by October 2030 (unless exempt).
Right now, the minimum is E.
That might not sound like a huge shift. In practice, it is. A significant proportion of UK rental stock currently sits at D or below, particularly older housing.
This isn’t a tweak. It’s a structural upgrade requirement across the sector.
Why are they proposing changes to EPC rules?
As part of the UK’s net zero targets, the government has created it’s Warm Homes Plan which includes planned changes to EPC ratings for rental properties.
At its core, the aim is to:
- Improve energy efficiency across housing
- Reduce energy bills
- Lower carbon emissions
On paper, that’s hard to argue with. But the implications for landlords means this is both complex and costly.
It’s not just the rating, the way EPCs are measured is likely to change too
This is the big bit many people haven’t fully realised yet.
Not only is the expected standard for EPC ratings on rental properties expected to change, the entire system for how EPCs are calculated is likely to be completely overhauled.
The current method used to measure energy performance is likely to change from a cost-based Energy Efficiency Rating (EER) to something being called the Home Energy Model (HEM) which comes into play in October 2029.
The new approach is expected to place more emphasis on:
- Fabric performance (insulation, windows, building efficiency)
- Heating systems and energy sources
- Overall energy performance, not just cost assumptions
Put simply, some properties may score differently under the new system even if nothing physically changes.
So, it’s not just about improving your property’s energy performance. It’s also about understanding how it will be assessed going forward.
What does EPC C mean in practice?
There isn’t a cut and dried formula to getting and EPC C rating unfortunately. Typical improvements might include:
- Loft and wall insulation
- Upgrading windows and doors
- More efficient boilers or heating systems
- Low energy lighting
But in some cases, more significant structural upgrades might be required.
For newer properties, a lot of this may already be achieved. For older properties, especially anything listed or in a conservation are, the upgrades could prove expensive and logistically challenging.
Whilst still in development, the new measurement system will take a fabric-first approach, so improving the thermal efficiency of a building is the first place to start. Don’t rush into buying heat pumps or solar just yet. As I said, the details are still in development and it’s a little way off yet and technology evolves fast.
If your property is already close to a ‘C’ rating, it might be worth getting it reassessed, especially if you’ve made improvements since the last assessment. If you can make improvements now and ‘get it over the line’ to a C before October 2029, you will benefit from the proposed ‘grandfathering’ arrangement. Basically, this means that properties rated EPC C under the current EER methodology before 1 October 2029 will be deemed to comply with the MEES rules until the certificate expires.
What happens if your property doesn’t meet the standard?
While final enforcement details are still evolving, the direction is clear – Properties that don’t meet the minimum EPC requirement may not be legally lettable and there will be fines for non-compliance.
Are there exemptions?
Yes, the new proposed rules do allow for certain exemptions. Broadly speaking, these are:
Cost cap
There will be a cost cap of £10,000 per rental property, or 10% of the property’s value if the property is valued at under £100,000. Costs incurred from 1 October 2025 count toward the cost cap.
Solid wall insulation
You can choose not to install solid wall insulation if it is the only remaining measure available to bring the property up to standard.
Third-party consent
If improvements require consent from the freeholder, planning authorities, mortgage company or the tenant, and they deny the consent.
Negative impacts
You might be able to register an exemption if you can provide evidence that a measure will negatively impact or devalue your property.
‘All relevant improvements made’
If the EPC report or another approved report shows that no further improvements are possible.
New landlord
Investors buying properties with sitting tenants will have a six-month grace period from the date of purchase to bring the property up to standard. You must register for this, it is not automatically applied.
All these exemptions come with varying time limits. They are not indefinite – you have been warned!
Is this bad news for landlords?
On paper, it reads like more work and more expense on landlords who are already being squeezed. But in reality, it really depends how prepared you are.
Landlords who may struggle:
- Older properties with poor energy performance
- Portfolios with tight margins
- Those who leave upgrades too late
Landlords who will be in a strong position:
- Modern, efficient properties
- Investors already reinvesting into their portfolio
- Those taking a long-term, strategic view
Just like the Renters’ Rights Act, this is another step towards a more professional, compliance-led sector.
What should landlords be doing now?
This is not something to ignore until 2029. If anything, early action gives you the most control – over cost, timing, and decisions.
Here’s where I’d focus:
- Check your current EPC ratings across your portfolio
- Identify which properties fall below C
- Get realistic costings for improvements now (not later when demand spikes)
- Prioritise upgrades strategically – not all properties will justify the investment
- Factor this into future purchases – EPC is now a key investment metric
Some landlords will upgrade. Some will restructure. Some may choose to exit certain properties. All of those are valid decisions, as long as they’re made early and intentionally.
My view as the owner of a lettings agency and with my own property portfolio
I don’t think this isn’t about catching landlords out. It’s about forcing a long-overdue upgrade to housing standards. We’re looking down the barrel of environmental disaster and this is part of the government’s efforts to prevent it.
But it will change the economics of property investment. And just like every major shift in this market, it will create two outcomes:
- Landlords who adapt early and strengthen their portfolios
- Landlords who leave it too late and are forced into reactive decisions
But I genuinely believe the opportunity is still there. But owning tenancy property is a professional game and you have to be prepared to treat it as such.
Need help understanding what this means for your portfolio?
Whether you’re reviewing your existing properties, considering upgrades, or deciding what to do next, getting clear advice now can make a significant difference.
My team at IMS Property Group work with landlords every day to help them make smart, commercially sound decisions, not reactive ones. If you’d like to have a chat, book in here.
