Cheaper power, not pricier homes – a better route to net zero? – Davies

The government continues to signal that all privately rented homes may need to achieve the equivalent of an Energy Performance Certificate (EPC) C rating by 2030, yet the policy remains uncertain. The measurement system itself is being redesigned, the deadlines are not locked in, and the incentives for homeowners and landlords who must ultimately foot the bill are still largely undefined.

In the meantime, a growing number of private companies have entered the retrofit market, offering surveys, costings and upgrade packages. But the figures are sobering: for many homes, the average cost of bringing a property up to EPC C now comfortably exceeds £15,000. In parts of the country with lower-value housing stock, including older Victorian terraces, the cost of retrofit may be as much as a third, or even half, of the property’s total value.

For landlords and homeowners already grappling with higher living costs, inflation and constrained wages, that level of investment simply isn’t realistic.

Who is responsible for making homes efficient?

Some policymakers have floated the idea that mortgage lenders should play a leading role in financing, subsidising, or even driving these upgrades.

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Intermediary Mortgage Lenders Association (IMLA) and others have been clear on this point: lenders cannot be made responsible for upgrading Britain’s homes.

Their role is to lend prudently, not to absorb the financial burden of national climate policy. Forcing them to carry that responsibility risks distorting the mortgage market, raising costs for consumers and creating new mortgage prisoners if poorly rated homes become harder to refinance.

This idea ignores a basic fact: almost 40% of all UK homes have no mortgage at all.

If responsibility for energy-efficiency targets is pushed onto lenders, what happens to the millions of unmortgaged properties? A retrofit strategy that only targets mortgaged homes would leave vast swathes of the housing stock untouched, while penalising those who happen to have taken out a loan.

In the private rented sector (PRS), the picture is even more complex.

Landlords face rising regulatory demands, higher interest costs and significant tax pressures. Many own only one or two properties, and a £10,000-15,000 retrofit requirement per property could push them into selling. Yet if landlords exit the sector, tenants – already struggling with record rents and tight supply – lose out.

Even landlords who want to improve their properties face a dilemma: if the work cannot be carried out with the tenant in situ, where is that tenant supposed to go during the retrofit? And if the cost of works can only be recovered through higher rents, the very people the policy is meant to help may end up paying more.

Tenants do, of course, benefit from better-insulated homes: lower bills, warmer living conditions and improved health outcomes. But unless retrofit is supported by grants, tax relief or low-cost finance, there is a real risk that landlords pass on costs or leave the market altogether. Piling responsibilities onto landlords without clarity, realistic timelines or financial support will shrink supply, drive up rents further and harm the most vulnerable tenants.

A holistic solution is needed

All of this points to a fundamental mismatch between ambition and implementation. The country needs a clear, coherent and equitable plan, one that recognises the diversity of the housing stock and the limited financial capacity of homeowners, landlords and tenants.

Before placing further cost burdens on struggling households, a government facing acute fiscal pressure might achieve more, more quickly, by focusing on cutting the cost of energy itself and redoubling its targets for generating more from renewable sources.

Improving the UK’s housing stock is undeniably important, and nobody disputes the benefits of warmer, more efficient homes. But before the country can move from aspiration to action, the government must provide clear rules, realistic timelines and meaningful support.

And perhaps most importantly, it must accept that the transition cannot be funded by mortgaged homeowners and landlords alone. A national challenge requires a national solution, not another bill pushed through the letterbox.