Section 24 and the Renters' Rights Act have dominated buy-to-let headlines for years, but the single biggest forward-looking risk confirmed so far in 2026 is a genuinely new one: an EPC C minimum standard for every rented property in England and Wales by 1 October 2030, with fines rising sixfold for non-compliance. This outlook sets out exactly what was confirmed in January 2026, what it will cost, and why the maths currently doesn't add up for the sector to meet its own deadline.
Figures below reference the Department for Energy Security and Net Zero's January 2026 Warm Homes Plan response, Hamptons' analysis of Ministry of Housing data, and published industry commentary, current to mid-2026.
1. What was confirmed in January 2026
On 21 January 2026, the Department for Energy Security and Net Zero published its response to the consultation on improving the energy performance of privately rented homes, as part of the wider Warm Homes Plan. After several years of uncertainty and repeated deadline changes, going back to proposals first floated years earlier, the government confirmed a single, definitive compliance date: all private rented tenancies in England and Wales, both new and existing, must achieve a minimum EPC rating of C, or an approved equivalent under a new methodology, by 1 October 2030. The earlier proposal for a phased approach, an interim 2028 deadline for new tenancies specifically, was dropped in favour of this single date applying uniformly.
2. The new cost cap and penalty structure
| Current rules (since 2018/2020) | New rules (from October 2030) | |
|---|---|---|
| Minimum EPC rating | E | C (or approved equivalent) |
| Cost cap per property | £3,500 | £10,000 (or 10% of property value for homes under £100,000) |
| Maximum fine per breach | £5,000 | £30,000 |
| Cost cap start date | — | Spending from 1 October 2025 already counts toward the cap |
If a landlord spends up to the £10,000 cap and the property still doesn't reach the required standard, a cost-cap exemption can be registered on the PRS Exemptions Register, valid for ten years. This means the requirement is genuinely capped in cost terms, a landlord cannot be forced to spend without limit, but the cap itself has nearly tripled from the current £3,500 level, reflecting the government's own estimate that meaningful upgrades cost considerably more than the old cap allowed for.
3. The HEM methodology transition
Alongside the new minimum standard, the way EPCs are calculated is itself changing. The current cost-based Energy Efficiency Rating (EER) methodology is being replaced by the Home Energy Model (HEM), a dual-metric system assessing a property's Fabric Performance (insulation, windows, airtightness) as the primary measure, alongside a choice of either a Heating System or Smart Readiness secondary metric. The new methodology is expected to launch during the second half of 2027 (delayed from an earlier 2026 target) and will run in parallel with the current system until 1 October 2029, at which point HEM becomes compulsory for all new EPCs.
Properties that achieve an EPC C under the existing methodology before 1 October 2029 will be treated as compliant with the new MEES rules until that certificate expires, typically up to ten years later. But once a property needs a new EPC after that transition date, it will be assessed under HEM, which is widely expected to be a more demanding standard, particularly for solid-wall, pre-1919, and other non-standard constructions. A landlord with a borderline current EPC C should not assume this rating will automatically translate under the new system, and early action while the current, better-understood methodology still applies is the generally recommended strategy.
4. The readiness gap: 2030 target, 2042 pace
The government's own estimate puts the scale of the challenge at around 2.5 million private rented sector properties currently below EPC C, more than half the sector, requiring an estimated 340,000 homes a year to be upgraded to meet the 2030 target. Research by estate agency Hamptons, analysing Ministry of Housing data, found that at the current rate landlords are actually making improvements, it would take until 2042, twelve years beyond the deadline, for all rental homes to reach the required standard.
Of rental homes that received a new EPC between January and August 2024, 39% moved into a higher band, a genuinely encouraging sign of progress. But 13% actually dropped into a lower band over the same period, and 48% saw no change at all. This uneven picture, meaningful progress in some cases, stagnation or even regression in others, is precisely why the overall sector-wide pace remains well short of what the 2030 deadline requires, even though many individual landlords are making real improvements.
5. Exemptions and the removed heritage exception
Beyond the cost-cap exemption described above, exemptions remain available for situations including where landlord consent for works is refused by a relevant third party, or where an accredited surveyor confirms an improvement would cause material devaluation to the property. A significant change from the January 2026 announcement is the removal of the previous blanket exemption for listed buildings, meaning heritage and listed properties, which had been broadly excluded from earlier proposals, are now brought within scope for the first time. The new rules are also confirmed to extend to whole-house HMOs and short-term rental properties, both previously subject to more ambiguous treatment.
6. The value angle: EPC rating and rent premiums
The compliance cost isn't purely a burden to absorb. Industry research has suggested a premium of up to 14% to 20% for properties rated A to C compared with lower-rated equivalents, in both sale price and achievable rent, alongside reduced void periods, since tenants increasingly weigh ongoing energy costs when choosing a rental property amid continued cost-of-living pressure. Energy efficiency improvements are also generally deductible against rental income as an allowable expense, and VAT on insulation materials specifically has been set at 0% until March 2027, a further, time-limited incentive to act sooner rather than later.
7. What this means for landlords now
- Audit your portfolio's current EPC ratings now, rather than waiting for MEES secondary legislation, targeted for 2027, to be finalised. The direction of travel and the core numbers are already confirmed.
- Front-load spending where practical. Costs incurred from 1 October 2025 already count toward the £10,000 cap, and using void periods between tenancies for disruptive works avoids friction with sitting tenants.
- Treat a borderline current EPC C with caution, rather than assuming it protects you indefinitely once the HEM methodology becomes compulsory from 2029.
- Factor this into any buy-to-let purchase or portfolio expansion decision now, alongside the ICR stress testing covered in our Portfolio Expansion Planner; a property requiring substantial EPC investment changes its real net return, not just its compliance status.
8. Frequently asked questions
When do private rented properties need to reach EPC C?
By 1 October 2030, confirmed by the government in its January 2026 Warm Homes Plan response. This applies to all tenancies, new and existing, from a single date, rather than the previously proposed phased approach.
How much will landlords have to spend to meet the new EPC C standard?
Up to £10,000 per property (or 10% of the property's value for homes under £100,000), up from the current £3,500 cap. If spending up to the cap doesn't achieve EPC C, a landlord can register a cost-cap exemption valid for ten years.
What are the penalties for non-compliance?
Fines of up to £30,000 per property per breach, up from the current £5,000 maximum, once the new MEES regulations formally take effect.
Are listed buildings exempt from the new EPC C requirement?
No, not automatically. The January 2026 announcement removed the previous blanket exemption for listed buildings, bringing them into scope for the first time, though property-specific exemptions may still apply where works would cause material devaluation or consent is refused.
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