As the political and regulatory pressure builds around minimum energy efficiency standards for privately rented homes, many landlords are questioning whether continued participation in the private rented sector (PRS) remains viable.
The combination of large upfront costs, uncertain returns, tax constraints, and policy changes—especially those embedded in the Renters’ Rights Bill—are reshaping landlord sentiment.
Below, we explore key arguments made by landlords (and echoed in sector commentary) about why the EPC minimum standard (specifically the push toward EPC C) may drive exits from the PRS.
The regulatory landscape and roadmap to EPC C
Under current proposals, existing tenancies must eventually meet EPC C standards by 2030, while new tenancies will be required to meet EPC C by 2028. The standard of EPC E is no longer sufficient in the long term.
Many landlords argue this timeline is overly aggressive given the realities on the ground: the most significant “low-hanging fruit” improvements have already been made in many rental properties, leaving more costly measures (e.g. external wall insulation, structural insulation, major upgrades) as the only route to compliance. Some landlords point out that even a 1- or 2-point improvement from a “D” to a “C” may require expensive works. Meanwhile, the reliability, interpretability, and consistency of EPC assessments are also under fire—some even claim EPCs are “a work of fiction,” with scoring that is often nontransparent or inconsistent.
Moreover, the policy context is changing. The Renters’ Rights Bill is expected to impose constraints on a landlord’s ability to pass on costs to tenants, limiting rent increases tied to compliance works. In other words, landlords may not be able to recoup energy-efficiency investments through higher rents as readily as before. Against that backdrop, many see an existential threat: if you can’t pass on enough of the cost, you bear the full financial burden—or simply leave.
Costs, break-even challenges, and financial strain
One of the most powerful deterrents for landlords is the sheer scale of cost relative to expected energy savings or rent uplift. The blog “Energy Performance of Privately Rent Properties” offers a stark worked example based on a small portfolio of three properties:
- The author assumes a total investment of £45,000 across the properties to raise them toward EPC C (i.e. £15,000 “cap” per property).
- He then estimates that the combined rent across these properties before costs is £24,000 per year. Thus, on that basis, the investment would “consume” two years’ full rent just to break even (ignoring all other costs).
- The landlord further calculates that to amortise the cost over 20 years plus cover interest (at 6% borrowing), one would need an additional rent of ~£4,950 per year—or ~21% increase.
- However, because the statutory £15,000 “spend cap” resets every 5 years (i.e. the landlord would need to keep investing at that level every 5 years until the target is achieved), the real amortisation period is 5 years, not 20. That requires ~£3,450 extra rent per year (for each property) to cover the cost.
- Adding in taxation (the additional rent is taxed at 20%) pushes the required rent uplift to ~£4,312 per annum to leave the landlord neutral.
- The author points out that raising that much rent would dwarf the supposed tenant energy savings of ~£240/year the government suggests.
- In fact, in his scenario, tenants would be several thousand pounds worse off annually, and rents would have to increase by 40-60% in some cases.
- In summary, he argues that many landlords would rather “evict the tenant” than invest in upgrades that will never pay off.
That example may be extreme and relies on many assumptions, but it underscores how marginal the financial margin becomes—and how sensitive the calculation is to rent uplifts, tax treatment, cost escalations, and enforcement constraints.
Other commentary in the Property118 article ‘Call to impose EPC rules on landlords as tenants ration energy‘ comment thread supports that view. One commenter notes:
“If … landlords are to be required to spend at least £15,000 to attempt to upgrade to a C, it is likely that they will seek an increased rent of £100 a month or more. That will likely wipe out any saving in heating costs for the tenants.”
Another commenter observes:
“In reality most of the remaining upgrades needed are expensive ones such as solid wall insulation … the cost to the landlord will be perhaps £10,000+ for the upgrades.”
These insights echo the financial pinch landlords feel: when compliance costs run into tens of thousands, repaid over a short amortisation period, the burden is often seen as untenable without strong policy support or unlocking of revenue.
Barriers to cost recovery: tax, rent caps, and policy limits
Landlords frequently lament that these EPC-mandated upgrades are treated as capital expenditure—meaning they cannot be offset immediately against rental income—but instead fall under capital gains tax rules when the property is sold.
This means that landlords get little in the way of immediate tax relief, reducing the incentive to invest.
Furthermore, the structure of the “spend cap” (e.g. the £15,000 threshold) and its reset every 5 years compounds the difficulty of long-term return. In the example above, because the landlord expects that he’ll have to spend the cap again in 5 years, he must amortise over that shorter horizon, making the effective cost per year much higher.
Adding to that, the Renters’ Rights Bill is expected to impose limits on how much landlords can increase rent in response to compliance works. Thus, even if a landlord believes the improvements will increase property value or desirability, their ability to raise rent specifically to recoup energy-efficiency investment may be curtailed. In effect, landlords may face a situation where they are forced to invest but cannot fully recover the cost through rent. This risk, many argue, will push marginal landlords out entirely.
Some landlords argue that, rather than being able to increase rent, they may instead be forced either to absorb losses or exit the sector. In that light, requiring EPC upgrades without giving sufficient rent flexibility or tax relief becomes a forced exit strategy.
Supply squeeze, rent inflation, and exit dynamics
Landlords who plan to “sit it out” until enforcement becomes real may still face an asymmetric risk: if many landlords exit, the supply of rental homes tightens. As landlords in better condition (those already compliant or with deeper pockets) remain, they can demand higher rents on the remaining stock. Some landlords have predicted “mass homelessness” or extreme rent inflation in a constrained market.
The author of the example property from think-we-are-stupid.blogspot.com suggests that even if tenants were expected to pay back the energy savings (~£240), the rent increases needed in his scenario amount to thousands per year—meaning tenants would be significantly worse off overall.
Others in the comment threads warn of odd anomalies: for example, a one-bedroom flat might end up being priced higher than a three-bedroom property already meeting EPC C, purely because of the cost burden of upgrade compliance. The resulting distortions in the rental market may be hard to reconcile politically or socially.
Illustration: how many years to recoup?
Let us summarise and generalise from the worked example, and consider alternative assumptions to explore break-even:
Scenario (simplified):
- A landlord owns a property with rent of £10,000 per year (pre-costs).
- To upgrade to EPC C, the landlord must invest £15,000 (the “cap”).
- Suppose borrowing cost is 6% interest, and tax on additional rent is 20%.
- Because of the reset every 5 years, the landlord chooses a 5-year payback period.
Calculation:
- Annual interest on £15,000 = £900
- To repay principal over 5 years: £15,000 / 5 = £3,000
- Total annual cost before tax = £3,900
- Rent uplift required to cover that (gross) = £3,900 / 0.8 (accounting for 20% tax) = £4,875 extra rent per year
- Original rent £10,000 → total rent must become ~£14,875
- That is a ~48.8% increase in rent
At a ~50% rent increase requirement, even many tenants would balk—and landlords risk pushing tenants out or reducing occupancy. If instead the landlord amortises over 10 years (despite the 5-year reset), the annual amortisation falls, but exposure to repeated reinvestments increases risk. If the landlord can only increase rent by, say, 10–20% under the new rules, the remaining burden must be absorbed by the landlord. Many would find that untenable.
So, even under modest assumptions, the years to recoup are extremely compressed unless rents can rise dramatically (and indeed consistently) or unless subsidies or tax reliefs substantially soften the burden.
Landlord sentiment and exit pressures
Putting together anecdote, worked example, and comment threads, we can identify some recurring themes in landlord sentiment:
- “I’d rather sell or repurpose than spend billions chasing uncertain ROI.”
The example author says that he has already reduced his holdings and is actively selling or converting properties.Many others echo the idea that if rules are too draconian, exit is the only viable alternative. - “Rent uplift demands will kill tenant affordability.”
Many landlords argue that even if tenants theoretically save ~£240/year, the rent increases required to fund upgrades will dwarf that saving. One commenter notes a £100/month increase to fund £15,000 of works. - “Tax rules are stacked against investment.”
Being unable to deduct capital costs against rental income, and facing CGT limitations, is seen as a structural disincentive to invest. - “The timeframe, reset rules, spend caps and evaluation uncertainty make the risk too great.”
The expectation of repeated works every 5 years, the opacity of EPC scoring, and the possibility that some properties (especially listed or constrained ones) may be impossible to bring to C push some landlords to the exit. - “Exit leads to supply shrinkage, which further raises rents for remaining stock.”
Some expect a structural contraction of the PRS, with remaining “compliant” properties commanding premium rents.
Risks, caveats, and policy levers
Not all landlords will or can exit. Some with deep capital reserves, large portfolios, or modern build stock may absorb the cost or already comply. Some may rely on government grants, tax incentives, or preferential financing to bridge the gap.
However, most landlords argue that for the policy to avoid mass exit, the government must provide:
- Greater tax relief or capital allowances for energy-efficiency investments
- Longer amortisation periods / longer spend caps so the cost doesn’t repeat every 5 years
- Flexibility in rent uplift tied to compliance (especially in the context of the Renters’ Rights Bill)
- Grant funding or low-interest subsidised loans for harder cases
- Clear, transparent, and reliable EPC assessment and enforcement frameworks
Absent these mitigations, many landlords see the rules as a “one-way bet” with little upside and significant downside—a push toward selling, conversion (e.g. owner-occupier use), or withdrawal from the PRS.
Conclusion
From landlord testimonies, worked examples, and public commentary, a consistent picture emerges: the EPC minimum standard—particularly the elevation to EPC C—poses severe financial, regulatory, and operational risks to landlords, especially smaller-scale or leveraged investors.
With constrained ability to increase rent under proposed legislation (e.g. the Renters’ Rights Bill) and unfavourable tax treatment, many see exit as the least bad option.
If policymakers wish to sustain an adequate rental housing supply while improving energy efficiency, they will need to reconcile the incentives and burdens more carefully. Without that, the spectre of mass landlord exit, sharply reduced rental supply, and upward rent pressure may be the real outcome of well-meaning energy standards.
How Landlord Sales Agency Can Help
For landlords who’ve had enough, there is a way out before the costly EPC works become unavoidable. Landlord Sales Agency specialises in helping landlords sell quickly, fairly, and with less hassle—whether the property has sitting tenants, EPC challenges, or other complications. If you’re considering an exit or simply selling older properties that will be difficult to update to meet the EPC requirements, now may be the best time to act, before rules tighten further and values are impacted.
Let us know what properties you would like to sell and start the conversation.
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