New EPC rating rules
- New EPC regulations are in the cooking pot.
- As of January 2026, 50% of welsh private rental sector property fails to meet the proposed standards and would not be permitted to continue to be let beyond 2030.
- At a meeting with Torsten Bell MP for Swansea in October 2025, Landlords in Wales raised with him two questions of importance out of 10 submitted, with a request that the MP please take these forward. The questions were:
- To acknowledge the poorer demographic of many Welsh Landlords.
A universal spend threshold was proposed by national government before becoming eligible for exemption from these new more stringent standards. This would weigh disproportionately heavily on landlords in poorer areas who also manage perhaps harder-to-upgrade properties, such as those in Wales?
And - A discordance arose between national government and Welsh government law. Could this please be looked at?
The grants for energy improvement measures (required in particular to comply with the proposed upgraded EPC requirements) are means-tested. They are offered to tenants as occupiers, and not to the landlord or owner.
Recent devolved Welsh rental legislation under the Renting Homes (Wales) Act strengthened tenant rights. This encourages landlords to bias towards ‘gold plated’ tenants for the contractual relationships they create with new “Contract Holders” going forward. Landlords naturally want ones that will not abuse those rights. However, such tenants are less likely to qualify for grants. This creates a practical conflict between the devolved legislation and the new regulation the UK government wants to implement. What can the government do to help?
Well, it has come to Landlords in Wales‘ attention that the proposed rules have been revised as follows:
- The 2028 deadline for new tenancies has been scrapped.
- All landlords now have until 1 October 2030 to reach EPC C (or register an exemption), regardless of whether tenants are new or existing.
- The spending cap has been cut from £15,000 to £10,000 per property, with lower caps for homes worth under £100,000.
- Energy efficiency improvements made from October 2025 will count toward the spending cap.
- The Government will offer support via low-interest loans.
- A “fabric first” approach will be encouraged, focusing on insulation and windows.
- EPC certificates will now be valid for 10 years instead of five, meaning any property that achieves EPC C (or above) before October 2029 will be treated as compliant through to 2039.
So, congratulations to the UK government – it appears you do listen, sometimes.
And thank you, Mr Bell, if you have been a part of this…
The mortgage perspective from
Trafalgar Square Financial Planning Consultants
EPC to MEES: What Portfolio Landlords Need to Know
The energy-efficiency rules for rental property are changing — and portfolio landlords should be planning now.
As a mortgage broker working with portfolio landlords, we are increasingly seeing energy efficiency become an important consideration when landlords review their property portfolios, refinancing strategies and future acquisitions.
The current minimum standard for most domestic privately rented property in England and Wales is EPC E. However, the Government has confirmed plans to strengthen the Minimum Energy Efficiency Standards (MEES), with the higher standard applying to all relevant tenancies by 1 October 2030, unless a valid exemption applies.
But there is another important change landlords need to understand:
EPC is changing — SAP is being replaced by HEM
Many landlords will be familiar with the current SAP (Standard Assessment Procedure) and RdSAP (Reduced Data Standard Assessment Procedure) methodologies that sit behind today’s EPCs.
These are being replaced by the Home Energy Model (HEM).
The HEM is designed to provide a more detailed and modern way of assessing how a home performs. Rather than simply producing one headline energy-efficiency score, the reformed EPC system is expected to provide a number of different measures, including:
- Fabric Performance – how efficiently the building fabric performs
- Heating System – the performance of the property’s heating system
- Smart Readiness – the property’s ability to use smart technologies effectively
- Energy Cost – an assessment of the property’s estimated energy costs
The Government has stated that HEM will replace SAP/RdSAP for the assessment of dwellings, with the reformed domestic EPCs currently expected to launch in the second half of 2027.
Why does this matter to landlords?
A property’s current EPC rating may not tell the whole story about how it will perform under the new system.
The Government has acknowledged that HEM and SAP use different calculations and assumptions. As a result, a property could potentially produce a different result under HEM than it does under the existing methodology.
Consider the timing of your next EPC
Current EPCs will retain their 10-year validity, including through the transition to the new HEM-based EPC system. For landlords with properties currently achieving a strong EPC rating, it may therefore be worth considering whether to commission a new EPC before the reforms take effect.
In particular, properties achieving EPC C under the current methodology before 1 October 2029 will be recognised as meeting the higher MEES standard for the remainder of that EPC’s validity period. This could provide landlords with valuable additional time to plan and fund any future improvements.
However, this is a strategy that should be considered on a property-by-property basis, particularly given the move from SAP/RdSAP to HEM and the fact that the new methodology may produce different results.
Don’t just look at the EPC letter
With the move from SAP/RdSAP towards HEM, landlords should start thinking beyond simply asking:
“What is the EPC rating?”
Instead, ask:
“How well is this property likely to perform under the new assessment methodology, and what investment might be required?”
The Government’s HEM proposals are specifically intended to give greater insight into different aspects of a property’s energy performance rather than relying on a single measure
The £10,000 cost cap
Under the Government’s confirmed policy, landlords will generally be required to invest up to £10,000 per property on relevant energy-efficiency improvements.
If the property still cannot meet the required standard after the relevant expenditure, the landlord can register an exemption, currently intended to last for 10 years.
There will also be other exemptions where improvements cannot reasonably be undertaken, for example because of certain consent, insulation or property-related circumstances.
Although 2030 may sound a long way off, landlords with larger portfolios could face considerable disruption if improvement works are left until the last minute.
That makes it particularly important to understand the direction of travel now.
The Government’s policy allows landlords to count certain qualifying improvement expenditure incurred from 1 October 2025 towards the future cost cap.
Landlords in Wales recommends independent mortgage brokers
Trafalgar Square Financial Planning Consultants
T: 20 8870 8787
E: info@trafalgarsq.co.uk
W:www.trafalgarsq.co.uk
(Please mention this page if you contact TSFPC to use their services)
