A lender has welcomed government proposals to enforce stricter EPC targets on the private rental sector – but it also warns against squeezing hard-pressed landlords.

Over the weekend the government launched a consultation on how to get all private rental properties to an EPC rating of C or above by 2030. The proposals include:

• Offering landlords a choice over how to meet energy efficiency standards. This will require them to meet a fabric standard through installing measures such as loft insulation, cavity wall insulation or double glazing, before moving on to a range of other options including batteries, solar panels and smart meters;

• A maximum cap of £15,000 per property for landlords, with support currently available from the Boiler Upgrade Scheme, and Warm Homes: Local Grant which begins delivery this year;

• An affordability exemption, which would lower the cost cap to £10,000 and could be applied based on lower rents or council tax band;

• Requiring all landlords to meet the new standard by 2030 at the latest, providing an extra two years compared with previous proposals. Homes that are already rated A-C before the introduction of new Energy Performance Certificates would be considered compliant until they expire.

The government is also consulting on a revised fuel poverty strategy, which it claims will focus on improving the energy performance of homes, supporting low-income households with energy affordability and protecting them from high prices.

Daryl Norkett, director of real estate proposition at Shawbrook, comments: “With changes to the rules, the hope and expectation is that the latest consultation on EPC rates will provide a more accurate assessment of improvements made to older properties. Under the current system, many of these properties are effectively excluded from achieving higher EPC ratings, even with significant upgrades. Modernised rules should aim to encourage and reward progress, such as the adoption of greener heating solutions, which are vital for driving overall energy efficiency.”

But Norkett urges caution on government expectations of landlords.

He adds: “Landlords have seen their profitability squeezed by a combination of rising interest rates and more regulation. Inevitably improving the EPC ratings of their properties comes at a cost and the return on that investment can be uneven across different regions and then across different types of properties.

“The cost of most improvements, for example heating upgrades, do not vary as much across the country as the value of the properties themselves and it is more challenging to make a business case to invest £10,000 into a property worth £100,000 in the North East than it is a property worth £500,000 in the South East.”