340,000 homes need energy efficiency upgrades annually

Analysis indicates that 880,000 rentals could be lost if landlords choose to sell properties with an EPC rating of E-G rather than invest in upgrading

Each year, 340,000 homes must be upgraded to meet the government’s energy efficiency target for rented homes to achieve an Energy Performance Certificate (EPC) rating of C or above by 2030. However, at the current rate of progress, it will take until 2045 for all homes in England and Wales to achieve this, 12 years later than the proposed target.

Research from Hamptons found that in 2024, 55% of all privately rented properties awarded a new EPC certificate achieved an A-C rating, compared to 48% of owner-occupier homes. In 39% of cases, the EPC move to a higher band, up from 34% a decade ago; half of homes previously rated D achieved at least a C rating upon reassessment, saving tenants an average of £499 annually on utility bills, while 29% of homes rated E were reassessed as having a rating of C or above.

Professor Richard Fitton, Professor of Building Performance at the University of Salford said: “It is heartening to see that in general the private rental sector is continuing the work of bringing its stock to a higher level, despite the last government scrapping their targets in this area.”

“The research points to around 340,000 homes a year to be retrofitted to meet a 2030 target…[this is challenging]…”

However, there is still a mountain left to climb, Fitton said: “The research points to around 340,000 homes a year to be retrofitted to meet a 2030 target, this is a challenging target, in particular when we consider the older housing stock.”

It is estimated 3-4% of rented homes will never achieve an EPC rating A-C because they are older, cheaper, and located in the North of England, where the upgrades required to meet the target will likely be financially unviable or unobtainable. Research found the estimated costs of improving home energy efficiency in some local authority areas of the North and Midlands equates to 25% of property values, compared to just 2% in affluent parts of London and the South East.

“Our understanding of this older stock is improving and technologies are being actively developed to help reduce energy usage in this stock, and in particular the recent move towards whole house retrofit and a more joined up approach to decision making on retrofit, will help make some deeper savings,” Fitton said.

But landlords must want to upgrade their properties, rather than sell for profit; older homes typically sell for a greater return (7.6%) compared to new-builds (5.5%) and analysis suggests 880,000 rental properties in England, Scotland and Wales could be lost if landlords choose to sell properties with an EPC rating of E-G, rather than upgrade.

Constant change surrounding energy efficiency measures has also made it difficult for landlords, and there may be more to come, as Ed Miliband, Secretary of State for Energy Security and Net Zero suggests the government will reinstate the minimum energy efficiency target scrapped under the previous government.

A spokesperson from the Department of Energy Security and Net Zero said: “The energy shocks of recent years have shown the urgent need to upgrade British homes so we can secure our energy independence and reduce fuel poverty. We will work with landlords to ensure that all homes are safe and warm. As part of this, our Warm Homes Plan will support investment in insulation and low carbon heating – upgrading millions of homes over this Parliament.”