The private rented sector contains 4.6 million households in England alone, and more than half are in properties rated EPC D or below. That means roughly 2.5 million tenants are paying £300 to £500 a year more on energy than they would in a properly insulated home. The landlord, meanwhile, has no incentive to fix it.
This is the retrofit split incentive, and it is not a new problem. But a recent analysis from Savills report puts hard numbers on the scale of the failure. The property consultancy estimates that bridging the gap between current performance and EPC C across the private rented stock would require £36bn of investment. Yet under current market conditions, landlords recoup that cost only through higher rent, which tenants cannot afford, and which the market will not bear in many areas. So nobody blinks, and the homes stay cold.
Who qualifies, and who doesn’t
The split is not symmetrical. Landlords control the capital; tenants control the running costs. The landlord who spends £8,000 on cavity wall insulation, loft top-up and a new boiler sees no reduction in their own bills, the tenant does. The tenant, who would benefit from lower heating costs, cannot legally force the landlord to carry out the work. The result is a standoff.
There are exceptions. Landlords who plan to sell within five years may invest to achieve a higher EPC rating, since that affects the property’s market value. But for buy-to-let investors with no intention of selling, and there are many, the maths does not add up. A landlord with a portfolio of 20 properties would need to spend roughly £160,000 to bring them all to EPC C. The return on that investment, in terms of rental yield, is close to zero.
Government has tried to nudge the market. The Minimum Energy Efficiency Standards (MEES) currently require an EPC E minimum for new tenancies. From 2028, that threshold rises to EPC C for new lets, and by 2030 for all tenancies. But enforcement is patchy, and the cost cap, currently £3,500 per property, means landlords can simply claim the work is not cost-effective and avoid it entirely.
What it costs a typical 3-bed semi
Take a typical three-bedroom semi-detached house in the Midlands, built in the 1970s with single-glazed windows, a gas boiler and minimal loft insulation. Its current EPC is likely D or E. To reach C, you would need:
- Cavity wall insulation: £2,000–£3,000
- Loft insulation top-up: £500–£1,000
- Double or triple glazing: £4,000–£7,000
- Heat pump (if boiler is end-of-life): £7,000–£13,000 after the Boiler Upgrade Scheme grant
Total: roughly £13,500 to £24,000. The tenant’s annual energy saving would be around £400–£600. But the landlord sees none of that saving. Even with the Great British Insulation Scheme offering free or heavily discounted cavity and loft insulation for low-income households, uptake among private landlords has been sluggish, partly because the scheme requires the tenant’s consent, and partly because the landlord must still pay for any non-insulation measures.
Yet the catch is that doing nothing is not cost-free either. From 2030, a landlord who cannot produce an EPC C will not be able to let the property at all. The penalty is a fine of up to £5,000 per property per year. That is a bigger cost than the retrofit in most cases, but it is still five years away, and many landlords are betting on a policy U-turn or a softening of the deadline.
What this misses, and what could fix it
The Savills analysis stops short of proposing a solution, but the logic points in one direction: the incentive must be aligned with the benefit. That means either the tenant pays the capital cost (via a green lease clause, for example) and recoups it through lower bills, or the landlord is compensated directly, through tax relief, grants, or a landlord-specific subsidy.
Scotland has already moved. The Scottish Government’s Heat in Buildings Bill, currently in consultation, proposes a mandatory loan scheme for landlords, with the loan attached to the property rather than the person. That means the cost is repaid when the home is sold, not upfront. It is not perfect, interest accumulates, but it breaks the deadlock.
England has no equivalent. The Boiler Upgrade Scheme is available to landlords, but only for heat pumps, not for insulation or glazing. The Great British Insulation Scheme covers some measures but not all. And the Landlord’s Energy Saving Allowance, a tax relief of up to £1,500 per property, is rarely claimed because few landlords know it exists.
The real fix, as energy efficiency campaigners have argued for years, is to make the EPC a condition of rent. If a tenant could legally withhold rent until the rating reaches C, the power imbalance would shift. That is unlikely under the current government, which has already delayed the 2028 MEES deadline once. But the cost of delay is being paid in cold homes, higher bills and lower health outcomes, especially for the 1.2 million children living in privately rented homes with EPC D or below.
Households in the private rented sector can push their landlord by contacting the local authority’s private sector housing team, which has enforcement powers under the Housing Health and Safety Rating System. Tenants can also apply for a free EPC assessment through the Energy Saving Trust and use the results to request specific upgrades. The next window for the Great British Insulation Scheme opens in October 2024, applications close on 31 March 2027. Landlords who wait until 2029 to act will face a scramble for installers and higher prices.
Frequently Asked Questions
Not directly, but you can request an EPC assessment and report damp or cold conditions to your local council, which can enforce minimum standards under the Housing Health and Safety Rating System. From 2028, all new tenancies will require EPC C, giving you more use.
Yes. The Boiler Upgrade Scheme offers £7,500 off a heat pump for landlords as well as homeowners. The Great British Insulation Scheme provides free or discounted cavity and loft insulation for low-income households. The Landlord's Energy Saving Allowance gives up to £1,500 tax relief per property, but take-up is low.
