UK Housing Market
England’s Housing Crisis:
9.3 Million Homes Facing Thousands In Upgrade Costs Under Labour’s 12-Week EPC Ratings Consultation
Landlords will be forced to upgrade to EPC C by 2030, costing £6,800 to save tenants £240
David Hannah, Group Chairman of Cornerstone Tax, warns that forcing landlords to fund costly upgrades will add unnecessary financial strain
New research from Eurocell has revealed that more than half of England’s homes fall below a C rating on the Energy Performance Certificate (EPC) scale, the minimum standard landlords must meet by 2030. With 9.3 million homes stuck at a D rating and just 0.3% of properties achieving an A rating, millions of homeowners and landlords face costly upgrades. David Hannah, Group Chairman of Cornerstone Tax, argues that while improving energy efficiency is important, imposing upgrade costs on landlords amid shrinking margins adds unnecessary financial pressure.
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Under Labour’s new regulations, landlords must upgrade rental properties to at least a C rating by 2030, a move aimed at improving housing quality and reducing tenant energy bills by an estimated £240 per year. However, the cost of compliance remains a major hurdle, with necessary improvements - including insulation, double glazing, and boiler upgrades - estimated at £6,100 to £6,800 per property. While a spending cap of £15,000 per home is being considered, thousands of landlords will struggle to afford the changes, potentially leading to a sell-off of less energy-efficient properties. Additionally, David reveals that these actions will lead to a sharp decline in rental stock, worsening affordability at a time when homeownership remains out of reach for many.
David highlights the UK's worsening housing affordability crisis, as a record number of landlords leave the rental market, intensifying these supply and demand issues. Cornerstone’s research shows that 19% of tenants have been forced to move five times in five years due to landlords exiting or passing on soaring mortgage costs. At the same time, demand continues to outstrip supply, with 17% of tenants losing out on rental properties in bidding wars. Meanwhile, slower equity growth has left many homeowners struggling to move up the property ladder, with house prices in England and Wales rising by 43% between 2015 and 2024 - significantly lower than the 64% increase seen between 2013 and 2022. Rising mortgage rates and stamp duty costs have further compounded the financial strain, making it harder to achieve a viable sale.
David Hannah, Group Chairman of Cornerstone Tax, warns that forcing landlords to fund costly upgrades will add unnecessary financial strain, reduce rental stock, and push up rents - ultimately costing tenants more than they save on energy bills:
"Whilst increasing the energy efficiency of properties is something that we would all agree is a desirable thing to do, forcing costs onto landlords to upgrade their properties at a time when their margins have been eroded by tax relief cuts, is an unnecessary additional compliance cost.
"It seems to be a recipe for a complete collapse in the availability of the rental stock in this country, at a time when affordability for purchase is still at an all-time low. This has been reflected in the falling number of new builds which have been started since the election of this government who set increased house building targets!
Demand for rental property will therefore remain steady or even increase as available stock is falling. However, perhaps we ought to reflect on the impact of government-forced additional costs to tenants. Spending £6500 on average to improve energy efficiency would be regarded as an improvement which will be reflected in rent increases, as the property is now more attractive and the landlord will have to achieve a return on his capital investment. This is assuming a 6% yield then this would result in a rent increase of £390 a year. If renters are only saving £240 a year on fuel bills then this is a net loss to the renter of £150! In actual fact, national yields are between 5% and 8% so the true loss would be between £85 and £280 depending on area."
David Hannah, Group Chairman
