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With new energy-efficiency rules on the horizon, brokers can help landlords plan early and protect their portfolios, says Matt McCullough, Head of Sales & Development at Aldermore
We know your landlord clients have a lot on their plates with the Renters’ Rights Bill moving through Parliament, but there are other changes they need to be aware of.
Tighter Minimum Energy Efficiency Standards (MEES) for privately rented homes are back on the cards after being scrapped two years ago by Rishi Sunak – but this time there’s a twist.
The tighter standards will be under a new system of measurement that could significantly change how Energy Performance Certificate (EPC) ratings are defined. So, landlords will get two EPC reforms for the price of one.
The government’s goal is clear, even if the execution is complicated. It wants to reduce carbon emissions, in line with the UK’s net zero by 2050 target, and make homes cheaper to heat.
The private rented sector has a key role to play, accounting for around 20% of the UK’s housing stock. So it’s time for brokers to raise the conversation about energy efficiency and help landlords plan ahead.
Under current MEES rules, landlords in England and Wales can only let out properties with an EPC rating of E or above (unless the property is exempt).
The new government has already consulted on proposals to improve the energy performance of private rented homes, moving towards higher standards (equivalent to a C rating) by 2028 for new tenancies and 2030 for existing ones. We’re still waiting for the outcome of this consultation.
At the same time, the government has also consulted on an overhaul of the Standard Assessment Procedure (SAP), used to calculate the energy performance of dwellings on which EPCs are based, as well as fundamental reforms to the Energy Performance of Buildings regime.
This includes updates to what EPCs measure, when they’re needed, and how they’re managed. The new methodology is expected to be introduced from 2026, but there is no definite timeline.
More confusingly, the new model might keep the familiar A to G banding we are used to (but even that isn’t guaranteed), and the thresholds and measurements behind each band will certainly change.
For landlords, the implications could be significant, and almost half of landlords (47%) have at least one D-rated property, according to the latest English Private Landlords Survey.
Rightmove estimated that there are around 2.9 million rental properties that need to be upgraded, at a cost of around £8,000 per property.
Properties that fail to meet the new minimum standards could become unlettable, harder to remortgage, or lose value (or all three).
But there’s good news too. Energy-efficient homes can attract better tenants, command higher rents, and maintain or increase their value over time. A survey by Oxford Economics revealed consumers are willing to pay 3.4% more for a highly energy-efficient home (A or B rated) compared with Band D.
Acting early gives your landlords more time to plan, spread the costs of energy-efficient upgrades and make informed decisions. For example, if they’re coming to the end of a fixed rate in the next year or so, they might want to consider releasing equity from their property now before locking into a new five-year fix.
Of course, some landlords might not want to make financial commitments or changes to their properties when they aren’t sure of the exact rules. And that’s completely understandable.
But it’s still important for them to know the EPC ratings of the properties in their portfolios and the changes that could boost their energy efficiency, as well as potential costs.
This is a key opportunity for you to add value and strengthen relationships with your landlord clients. Here’s how:
Even though the precise details of the EPC changes are still being worked out, the direction of policy is set. The government is committed to higher energy-efficiency standards, and EPC reform will make those standards more accurate.
Aldermore will keep you up to date with any new announcements and work with you to help find funding solutions for your clients.
For now, start by making sure they know the tightening of minimum energy-efficiency standards is back on the table. Then help them to review their properties, explore finance options and plan to make improvements, even if they want to wait until the rules are published before pressing the button.
Get ahead of the game now so they are prepared for change when it comes.