Tenants support energy-efficient homes but rising costs and limited government support has created a lack of willingness to pay for them, latest research from Leaders Romans Group reveals.
As the government considers new regulations requiring rental properties to meet an Energy Performance Certificate (EPC) rating of C or higher, tenants overwhelmingly support these changes. However, most are reluctant to pay higher rent for these improvements.
The LRG survey reveals that 80% of tenants are in favour of their properties being upgraded to an EPC rating of C or above, reflecting a clear desire for more sustainable homes.
However, only 6% of tenants are willing to pay more rent to achieve these upgrades. This presents a significant challenge for landlords, especially in light of rising retrofitting costs and reduced government support for energy efficiency improvements.
COST
One landlord says: “I own an older property that will cost tens of thousands of pounds to improve from an EPC ‘D’ to an EPC rating of ‘C’. It will take too many years to recover the investment made.”
And another said: “Someone needs to point out to the government that if the minimum EPC is raised to ‘C’, landlords like me will sell up rather than spend £50,000 upgrading the property to meet this threshold. I simply can’t face the cost, so to be compliant with the law I will have to evict my tenants when that time comes. Not a good outcome for the tenants or me, and will certainly put increased pressure on the rental sector. There are likely to be hundreds or thousands of landlords thinking the same thing.”
GREEN HOMES GRANT
One government initiative, the Green Homes Grant, which aimed to retrofit 600,000 homes, was closed prematurely after reaching fewer than 10% of that target.
The majority of remaining support, such as grants available under the Energy Company Obligation (ECO), now focuses on low-income households.
This shift leaves many landlords, particularly those with older properties that do not qualify, struggling to finance the retrofits necessary to meet EPC regulations. According to RICS, the UK will need an investment of £250 billion to upgrade its 29 million homes by 2050 to meet decarbonisation targets.
LANDLORD PROBLEMS
One tenant said: “I think they are really just causing more problems to landlords, and I disapprove of the government’s stance on this” and another said “if introduced, they should be funded by the government since they keep changing the goalposts.”
Adding to these challenges, the Rightmove Greener Homes Report 2024 revealed that 50% of landlords are concerned about the high costs of meeting EPC requirements. Retrofitting properties to meet EPC C standards is estimated to cost landlords an average of £8,074 per property.
FINANCIAL PRESSURE
With rising material costs and limited access to government grants, landlords face increasing financial pressure to implement these upgrades.
This combination of limited funding and escalating costs highlights the critical role that government incentives will need to play in driving energy efficiency improvements across the rental sector. Without additional support, many landlords will be unable to afford the necessary upgrades, hindering the UK’s progress toward its 2030 EPC targets.
ENERGY-EFFICIENT FEATURES
The LRG report also reveals tenants’ strong preference for specific energy-efficient features. Seven out of 10 (70%) of tenants want energy-efficient appliances in their homes, making this the most in-demand feature.
However, only 11% of tenants are willing to pay extra for such appliances, underlining the affordability gap. Tenants also expressed interest in solar panels (8%) and low-flow fixtures (11%), though only 6% are willing to pay extra for these additional upgrades, A graph of blue and grey bars.
FINANCIAL BURDEN
Allison Thompson, National Lettings Managing Director at Leaders Romans Group, says: “The desire for greener homes is clear, but tenants are not prepared to bear the financial burden.
“While tenants are eager to see energy efficiency improvements, particularly those that lower utility bills, there is little appetite to pay higher rent for these upgrades.
“For landlords, the cost of upgrading older properties is substantial, and without government-backed incentives, we’re likely to see limited progress toward the proposed EPC targets.
“Balancing tenant demand for sustainable homes with the financial realities faced by both tenants and landlords remains a significant challenge.”
She adds: “Without government intervention or financial incentives, the adoption of these features will likely remain slow, despite growing interest. Collaboration between the government, landlords, and tenants is essential to meet the UK’s energy efficiency goals. Incentives are crucial to ensuring sustainability without increasing financial strain on either party.”
