What buy-to-let owners should understand now
Energy efficiency standards for rental property are moving in one direction: upwards.
For landlords in England and Wales, the government’s plans mean that many rental properties will need to meet a higher minimum standard by 1 October 2030, unless a valid exemption applies. At the same time, the way energy performance is assessed is changing, which means some properties may need a different approach from the one landlords are used to today.
At London FS, we see this as more than just a compliance issue. For landlords, this could affect future remortgage options, improvement budgets, purchase decisions, long-term portfolio planning and, in some cases, whether a property remains commercially attractive to hold. That is why it makes sense to understand the direction of travel now, rather than leave it until the final few years.
What is changing?
The government has confirmed its intention to raise the minimum energy efficiency requirement for privately rented homes in England and Wales to the equivalent of EPC C by 1 October 2030. Properties that do not meet that level by then may only continue to be let where a valid exemption has been registered.
This is expected to apply across both new and existing tenancies. The source guide also notes that the proposals extend to whole HMOs where a single room is let, certain short-term rental properties and some heritage properties where an EPC is required.
For landlords, the practical message is simple: this is not just about your next tenancy. It is about the long-term lettability and financing of the property.
The way EPCs are measured is changing too
This is where many landlords may be caught off guard.
The current EPC system most landlords know is based around the Energy Efficiency Rating, often referred to as the EER. That system is due to give way to a new approach under the Home Energy Model. The government has confirmed the move towards new-style EPC metrics, including fabric performance, heating system performance, smart readiness and energy cost.
In plain English, that means the future assessment will not simply reward the same things in the same way as the current system. A property that looks acceptable under today’s EPC method may not necessarily perform the same way under the newer model.
A stronger focus on the building itself
One of the clearest themes in both the source guide and the government’s new direction is the importance of the building fabric.
That means the physical efficiency of the property itself: insulation, glazing, airtightness and how well the building retains heat. Under the proposed framework, landlords are expected to meet the required fabric standard first, unless an exemption applies.
This matters because many landlords naturally think first about replacing a boiler or adding solar panels. In reality, the more sensible starting point may often be the condition and thermal performance of the property itself.
Heating systems and smart energy measures
Once the fabric requirement is met, landlords are expected to satisfy a second route through either the heating system metric or the smart readiness metric. The heating system metric favours more efficient, lower-carbon technologies such as heat pumps and low-carbon heat networks. The smart readiness route looks at measures such as solar panels, batteries, smart heating controls and related smart energy features. The government has confirmed that solar panels alongside a smart meter would be enough to achieve a C rating on that metric.
That does not mean every landlord should rush to install expensive technology now. It does mean that, over time, compliance may involve more than straightforward insulation upgrades, depending on the property.
The transition period matters
There is an important timing point here.
The source guide explains that there will be an initial transition period in which landlords can still obtain EPCs under the current methodology before the newer system becomes the only route. It also explains the “grandfathering” position: where a property achieves EPC C under the current EER methodology before 1 October 2029, that property can continue to be treated as compliant until that certificate expires or is replaced. The government has confirmed this in its 2026 response.
For some landlords, this may create an opportunity to carry out sensible improvements sooner and secure a compliant rating under the current framework. For others, especially where the property may perform better under the newer methodology because of existing energy features, a wait-and-see approach may be more appropriate.
That is why a blanket approach rarely works.
The proposed cost cap
The source guide states that the cost cap will be £10,000 per property, or 10% of the property’s value where the value is under £100,000. It also states that qualifying expenditure from 1 October 2025 counts towards that cap. The government’s response aligns with that general framework.
In practice, this means that where a landlord has spent up to the relevant limit, or where the next recommended measure would push spending beyond that threshold, the landlord may be able to register a cost-cap exemption.
For landlords, this makes record-keeping essential. Receipts, invoices and supporting evidence should be kept properly from the outset.
Exemptions landlords should be aware of
The source guide sets out several important exemptions.
These include a cost-cap exemption, a solid wall insulation exemption in limited circumstances, a third-party consent exemption where necessary approval cannot reasonably be obtained, a negative impact exemption where works would reduce the property’s value by 5% or more, an exemption where all relevant improvements have already been made, and a new landlord grace period for investors purchasing a tenanted property. The guide states that the grace period is six months and that existing exemptions do not automatically transfer to the new owner.
The key point is that exemptions are not informal or automatic. They need evidence and, where applicable, registration on the PRS Exemptions Register.
What this means for landlords in real terms
For many landlords, these changes are about much more than the EPC itself.
They may affect whether a property remains straightforward to remortgage, whether additional capital needs to be set aside, whether a purchase still stacks up once upgrade costs are included, and whether some weaker-performing assets still fit within a longer-term portfolio plan.
This will be especially relevant for portfolio landlords, limited company borrowers and anyone working to a refinancing timetable over the next few years.
What landlords should be doing now
1. Review your current EPC position
Understand where each property currently stands. Some assets may already be close to the required level. Others may need a much more considered plan.
2. Start with the building itself
In many cases, improving insulation and the overall thermal performance of the property is likely to be the most sensible first move.
3. Do not rush into major spending without a plan
The rules are clearer than they were, but the newer EPC framework is still a significant shift. Large capital works should be considered carefully and in context.
4. Check whether grants may be available
The source guide highlights that grant support may be available, particularly in some tenant or local authority scenarios.
5. Keep full records of all qualifying spend
If expenditure from 1 October 2025 may count towards the cap, paperwork matters.
6. Build EPC planning into your finance strategy
If you are remortgaging, restructuring, acquiring or reviewing stock, energy performance should now form part of that conversation.
London FS view
The broad message is clear: landlords should not panic, but they should prepare.
The direction of policy is now established. By 2030, landlords are expected to be operating to a higher standard, and some properties will need a more strategic plan than others. The best response is not to make rushed decisions. It is to look at each property properly, understand the likely route to compliance, and make sure mortgage planning and asset management are aligned.
Done properly, this becomes manageable. Left too late, it could become expensive and restrictive.
Important note
This guide is intended as general information only. It does not amount to legal, tax or regulated mortgage advice, and the right course of action will always depend on the individual property, ownership structure, tenancy position and lender requirements.
