It will cost almost £23 billion to upgrade the UK’s leaky rental homes, new analysis reveals

• Analysis by Outra, a data science company, shows that over 3 million of the UK’s rental homes have an energy performance certificate (EPC) rating of D or below.
• Proposed regulations plan to introduce a minimum of an EPC C rating for new tenancies from December 2025
• The average cost for upgrading a rented property to EPC C stands at £7,646 meaning the total cost of upgrading the 3 million homes will be £23 billion.

The latest analysis by Outra, a data science company, shows that of the 5.6 million UK rental homes (excluding Scotland), over 3 million (59%) are rated EPC D or below. This is little surprise given the UK has the oldest housing stock in Europe, with almost 38% of homes being built prior to 1946.

Proposed regulations will introduce the requirement for all new tenancies to have an EPC rating of C from December 2025, with the new regs kicking in for existing tenancies from December 2028. A home with a higher EPC rating is likely to be more insulated and efficient which will reduce energy usage and keep bills down. 

Research carried out by the Department for Levelling Up, Housing and Communities suggested the average cost to upgrade a privately rented property to an EPC C rating will be £7,646 per property.

Outra’s analysis shows the total bill for upgrading the three million rented homes rated D or worse to EPC C stands at almost £23 billion. 

Given the ongoing cost of living crisis and rising interest rates, the question will become who will pay as both landlords and tenants are likely to struggle to find the cash to pay for these upgrades. The Resolution Foundation estimates the typical household’s income will fall by £1,000 (4 percent) in the year ahead. 

Worst performing regions

London and West Midlands are the worst-performing areas with 62% and 60% of total rented properties rated EPC D or below, leaving landlords in those areas looking at a cost of over £9 billion and £1.7 billion respectively to upgrade their rental properties to meet incoming standards.

Giles Mackay, founder of Outra and iBuyer UPSTIX, said:

“The rising cost of living means many renters are already set to find their energy bills soaring this winter, but for those renting in homes with poor EPC ratings, the likelihood is that they are going to face an even costlier winter. It will also be a worry for ‘mom and pop’ landlords who may struggle to afford the cost of upgrading to EPC C amid the ongoing cost of living crisis and therefore may look to sell up which could lead to a dwindling of rental homes on the market. All in all, this means the market has two problems: a lack of quality rental stock and the potential for huge numbers of landlords to leave the market.

“A solution to this problem is for the Government to double down on institutional investment into the PRS sector as well as look to help many renters get on the housing ladder. With Help to Buy set to expire next year, a whole host of options such as shared ownership should be considered”.