The Warm Homes Plan: clarity at last for residential landlords

The Warm Homes Plan confirms the trajectory that has been trailed (but not decisively settled) for years now: from 2030, it will not be possible to let residential properties in the PRS if they have EPC rating D,E or F, unless they have registered a valid exemption.

However, the methodology for calculating EPCs is also about to change.  As explored here, the Government proposes to use multiple metrics on EPCs to provide a more complete representation of building energy performance, rather than the current single headline metric.  These are further explained in the Government's partial response to the ‘Reforms to the Energy Performance of Buildings regime’ consultation that was published on 4 December 2024.

According to the Warm Homes Plan, landlords will be able to choose between the smart or heat metrics to reflect what will work best for their property.

The Government has also announced a new consultation about the EPC wrapper for the Home Energy Model, the new methodology underpinning EPCs, including allowing calculations based on on-site inspection of existing dwellings, and their proposals for how the new headline metrics should be calculated and translated into EPC scoring bands.  This closes on 18 March 2026.

In terms of timing, the Government plans to lay a statutory instrument this year with the aim of it coming into force in 2027.  As a transitional measure, if a property already has an EPC rating of C (via an older EPC) before October 2029, then it will continue to be deemed compliant with the regulations until that EPC expires.  Many landords are therefore likely to obtain new EPCs in 2028/2029 to allow time for the new metrics to bed in.

The amount of money that a landlord will be expected to spend on improving a property's EPC rating will be increased from its current level of £3500 to £10,000 per unit.  The Government has predicted an average cost of around half of that.

There will be a new low-value property exemption, which will lower the spending cap where £10,000 would represent 10% or more of a property’s value ie for units valued at £100,000 or less.

There will be some financing options available to landlords, including BUS grants (under the Boiler Upgrade Scheme).  If landlords make improvements using their own funds then this expense can be eligible as an allowable expense and can therefore be tax deductible.  In terms of eligibility for energy loans, the Government will launch a call for evidence shortly to identify parts of the housing market where the new Warm Homes Fund can deliver the greatest impact as well as owner-occupiers, and this will consider extending loans to both private and social landlords.

In order to avoid a scramble for works in 2029/30, the Government has annnounced that relevant improvements made from October 2025 onwards will count towards a property’s cost cap in 2030.

The Renters' Right Act 2025 lays the framework for incorporating Awaab’s Law and the Decent Homes Standard ("DHS") into the PRS, both of which involve an element of mandatory thermal comfort.  The Government proposes to implement the DHS in either 2035 or 2037 and to consult on timescales for implementing Awaab’s Law.

The Government has also said that it will publish the Future Homes and Buildings Standards consultation response, including the standards’ full specification, and to lay the associated regulations in Q1 2026. Under these standards, new homes will have low-carbon heating, high levels of energy efficiency and solar panels by default.

Commentators have remarked that the plan tilts Britain’s “homes upgrade” spending away from insulation and towards technologies such as solar panels, batteries and heat pumps.  This is probably a reflection of the current high energy costs, falling heat pump costs and also the recent National Audit Office report into the damage done by faulty home insulation carried out under the ECO scheme.  However, it has also been pointed out that insulation and draught-proofing are often what makes the biggest difference to comfort and to reducing damp and mould, and that there are ESG supply chain problems with much of the renewable energy technology hailing from China.

Landlords of residential properties in the private PRS will be relieved to have clarity over the new MEES rules and to have relatively generous transition arrangements, although it will be important to engage in the current consultation about the Home Energy Model methodology.  Landlords of commercial properties in the private RPS will hope that similar certainty will follow for them.