Government reforms Energy Performance of Buildings regime and raises minimum energy efficiency standards in homes in England and Wales

Minimum energy efficiency standards (MEES) for residential tenancies will rise to a C rating by 2030, and the regime for assessing the energy performance of buildings in England and Wales will be reformed to improve the accuracy and reliability of building performance measurements, and to support the government’s commitments on fuel poverty and net zero.

These changes were confirmed in the government's January 2026 responses to its consultations on reforms to the Energy Performance of Buildings (EPB) regime and MEES for the domestic private rented sector. While these publications offer greater clarity for stakeholders, several aspects of the EPB consultation are yet to be addressed.

Reforming EPCs

The government's partial response to the December 2024 EPB regime consultation focuses on EPC metrics and when certificates are required.

New EPC metrics explained

For domestic EPCs, the existing single cost metric will be replaced by four new headline metrics: energy cost (estimated annual bills), fabric performance (measuring thermal performance and insulation), heating system (assessing heating technologies and emissions), and smart readiness (evaluating self-generation and smart technology integration), with secondary energy demand and carbon-based metrics.

To support the transition, the legacy Energy Efficiency Rating (EER) metric will be temporarily retained for comparison with new EPC data and to support ongoing regulatory compliance. The government is also consulting on how new EPC metrics will interact with the Home Energy Model.

Using multiple metrics for domestic EPCs is intended to provide consumers with more meaningful performance data and enable more targeted government action on fuel poverty and net zero, but also has the potential to affect property ratings and valuations.

For non-domestic EPCs, the single carbon-based Environmental Impact Rating will remain the headline metric, offering clarity and consistency for commercial property owners and easing concerns that changes to assessment methodology could lower ratings and put landlords in breach of commercial MEES requirements.  

When will EPCs be required?

The ten-year EPC validity period will remain unchanged. However, in future, EPCs must be provided before properties are marketed (currently they are only required from the point of sale or rent).

The regime will also be extended to whole homes in multiple occupation when a single room is let, short-term rental properties regardless of who pays the energy bills, and heritage properties (removing the existing exemption). This represents a substantial widening of scope, partially offset by an expansion of exemptions under the domestic MEES regime.

The new form of domestic EPC is intended to be introduced from October 2026, although the government itself describes this timetable as “ambitious”. A further government response addressing the outstanding consultation questions is also expected later this year.

Raising Minimum Energy Efficiency Standards for homes

From 1 October 2030, domestic privately rented homes must achieve a minimum EPC rating of C in order to be let. This tightening of requirements has been anticipated for some time, but formal confirmation will provide certainty to the sector. However, the timetable may be challenging where properties need substantial upgrade works and for landlords with large portfolios.

The published response to the consultation on improving the energy performance of privately rented homes also confirms a new dual-metric standard: a primary fabric performance standard, plus a secondary standard against either smart readiness or heating system metrics, with landlord discretion on which to pursue. This allows landlords either to retain and improve an existing heating system (to avoid unnecessary replacement) or to install a more energy efficient and low carbon heat system (with potential funding support). Even if a property fails to meet the primary standard (and an exemption is registered), it must still meet the secondary standard, unless a further exemption applies.

MEES will also to be extended to the social rented sector in England by 2030 and is to be included in the Decent Homes Standard (DHS). This will apply to all registered providers, although properties owned under Low-Cost Home Ownership Schemes, such as shared ownership properties, will be excluded. These requirements are to take effect ahead of the wider DHS reforms, which are now expected from 2035. Further detail on the mechanics for the social rented sector is awaited; the provisions outlined below relate to the private rented sector.

'Grandparenting' transitional arrangements 

Domestic properties achieving an EPC rating of C or above under the outgoing EER metric (which will temporarily continue to feature on reformed EPCs) before 1 October 2029 will be treated as compliant until that EPC expires or is replaced. These “grandparenting” provisions are intended to protect proactive landlords and incentivise early action.

Expanded exemptions framework

The range of exemptions available to landlords will be widened, providing some mitigation of their exposure. These will include:

• An expenditure cap will restrict required investment to £10,000 per property, with a lower cap for properties valued below £100,000 (equivalent to 10% of the property value). Potentially, larger landlords may be able to apply a cumulative cap across their portfolios and prioritise spend on the worst-performing assets (although this remains under consideration). The exemption will be valid for 10 years.
• A "negative impacts" exemption will apply where landlords can show that a measure would harm the fabric or structure of the building.
• A "solid wall insulation" exemption will allow landlords to decide whether solid wall insulation is appropriate for their property.

The existing “high cost”, “third‑party consent”, “new landlord” and “all relevant improvements made” exemptions will also be retained, although the latter two will be subject to adjustment. Short-term rentals are also currently outside scope.

Landlords must register any exemptions on the PRS MEES Exemptions Register.

Landlord support

Financial support will be available to eligible landlords via the Warm Homes Plan (see more below).

Until March 2027, certain energy saving materials and installation (such as insulation and low carbon heating) may be eligible for zero rated VAT. Additionally, government guidance will be issued on the tax treatment of landlords’ investment in improving the energy efficiency of their properties, including when expenditure may qualify as a deductible expense. 

Enforcement

Local authority enforcement against landlords is expected to increase, with proposals to raise the maximum penalty to £30,000 per property, per breach.

The forthcoming PRS Database will enhance local authorities’ visibility for enforcement, and improvements to the PRS MEES Exemptions Register are also anticipated.

Warm Homes Plan 

The government is also launching the Warm Homes Plan, investing £15 billion to help households install measures such as solar panels, heat pumps, batteries and insulation. Eligible landlords will continue to be able to access support under the Boiler Upgrade Scheme, although this will not count towards the PRS MEES cost cap. The government is also exploring the expansion of consumer financing to support home upgrades.

Osborne Clarke comment

These reforms will significantly reshape the EPB regime and MEES for the residential sector, adding further regulatory change for residential landlords amid their preparations for their new obligations under the Renters' Rights Act 2025.

The combination of transitional arrangements, expanded exemptions and continued government support may ease some of the burden, but compliance may still prove challenging for landlords with inefficient assets or large portfolios. Landlords should engage early by reviewing current EPCs, planning and phasing upgrade works, and assessing which metrics and exemptions are most appropriate for each of their properties.

The continued lack of clarity on the future trajectory for non-domestic MEES leaves commercial landlords and investors operating in a more uncertain environment. However, the direction of travel is clear, and many landlords will be progressing upgrades in response to sustainability commitments, lender requirements and tenant demand. Those with mixed portfolios will need to navigate diverging regulatory frameworks and timelines carefully to protect value and maintain future marketability.