The government is planning significant changes to the EPC energy efficiency rules this year. In this post, we’ll explain what the current rules are, and how they might change. We’ll also explore how these new rules might affect your real estate insurance as a landlord.
If you have any questions about your real estate insurance needs, call us on 0208 290 9082, or email us at info@anthonyjones.com.
What is an EPC Rating?
EPC stands for Energy Performance Certificate. This is a rating of how effectively a property retains heat. EPC ratings are graded on a scale, from A to G.
A property with a good EPC rating will retain a lot of heat, meaning that tenants will not have to use so much energy to stay warm. Conversely, a property with a poor EPC rating will not retain so much heat, which means that tenants will have to use a lot more energy to maintain a warm temperature.
2026 Changes to EPC Energy Efficiency Rules
The Government’s Warm Homes Plan outlines a number of policies that are intended to upgrade homes while cutting energy bills. As part of this, the government has outlined a number of changes to the EPC energy efficiency rules, affecting:
- Assessment changes
- Minimum Standards
- Investment cap
- New exemptions
- New penalties
- Insurance implications
We’ll explore each of these in more detail.
Standard Assessment Procedure (SAP) replaced with Home Energy Module (HEM)
Previously, the Government used a Standard Assessment Procedure (SAP) to calculate a property’s energy efficiency. This methodology involved simulating a property’s energy use, along with its estimated carbon emissions.
As part of the new rules, this assessment module will be replaced by a Home Energy Module (HEM), which may give a more accurate and reliable idea of a property’s energy efficiency.
The module will look at the property’s fabric performance (e.g. the prevalence of insulation, draught-proofing, and double glazing), along with its heating system. Electric heating systems with smart capabilities will get a higher rating than older gas and fossil fuel systems.
New Minimum EPC Rating Requirements
Properties will still get an EPC rating from A to G. Currently, all rental properties must meet a minimum EPC requirement of E. Under these new rules, all rental properties in England and Wales will have to achieve at least an EPC C rating.
The new minimum standard will apply to all properties from 1 October 2030.
What’s more, currently EPCs are valid for 10 years. Under the new rules, they will only be valid for five years.
New Investment Cap
In order for landlords to meet these targets, the government has specified a required investment which they’ve capped at £10,000 per property, including VAT.
The government has specified that certain grants, such as the Warm Homes Local Grant, will count towards this £10,000 cap. However, the Boiler Upgrade Scheme voucher will not count.
New EPC Exemptions
It may not be possible for all properties to achieve an EPC C rating. It may prove prohibitively difficult to improve insulation and heating systems in certain older buildings, for example. Because of this, the government has announced a few exceptions to the new rules:
- Properties valued at less than £100,000 will have a required spending cap of 10% of the properties value, as opposed to the full £10,000 investment cap.
- Depending on the building’s overall “fabric standard”, landlords may be able to register an exception should they not wish to install solid wall insulation.
- Landlords may also be able to opt out of improvement measures if they can prove that the works would physically compromise the building’s structure, or reduce its market value by 5% or more.
New Penalties for Not Meeting EPC Targets
In order to meet the ambitious energy efficiency targets for 2030, the government has outlined some severe penalties and fines for any landlord who does not comply. This includes some new and expanded powers for local authorities.
Local authorities will be able to issue landlords with compliance notices. Following this, landlords will have to provide an up-to-date EPC, along with current tenancy agreements. They’ll also have to provide evidence of any improvements they’ve made to the property’s energy efficiency.
Local authorities will also be able to issue non-compliant landlords with a fine of up to £30,000 per property, per breach. Breaches include letting non-compliant properties, failing to follow compliance notices, and supplying false or misleading information when registering for an exemption.
New Insurance Implications
Finally, these new regulations will likely force many landlords to review their current real estate insurance policies.
As many properties will require considerable renovations in order to achieve compliance, some landlords may need to take out additional renovations cover for their properties, as their current policies may not cover the works.
Also, as landlords across England and Wales rush to improve their properties, it may increase the price and the lead time on certain materials and works. This could have the knock-on effect of increasing the rebuild costs of some properties, which in turn could lead to higher insurance premiums across the sector.
Are You Ready For The New EPC Energy Efficiency Rules?
Mark Stevenson from Anthony Jones says:
“In the long-term, these new EPC rules may lead to better property conditions and warmer homes for tenants across the country. But in the short-term, we’ll likely see a lot of stress and confusion as landlords work to achieve compliance.
“Act as early as possible to avoid the rush, and to get all the help you can from the government’s grants and exception schemes. Working with an insurance broker could also make a huge difference. We can help you navigate the evolving regulatory environment while ensuring you have the specialist cover you need at a competitive price.”
Explore our real estate insurance for landlords, and if you have any questions about your real estate insurance needs, call us on 0208 290 9082, or email us at info@anthonyjones.com.
