Policy paper

Improving the energy performance of privately rented homes: 2025 update - CFP response

Published 26 June 2025

The Committee on Fuel Poverty (the Committee) is an advisory Non-Departmental Public Body sponsored by the Department for Energy Security and Net Zero (DESNZ). The Committee advises on the effectiveness of policies aimed at reducing fuel poverty and encourages greater co-ordination across the organisations working to reduce fuel poverty.

The Committee on Fuel Poverty welcomes the opportunity to comment on the updated proposals for improving the energy performance in privately rented homes in England and Wales.  In our annual review we emphasised the critical importance of improving energy efficiency standards in the private rented sector where 24% of households were, using the LILEE metric in fuel poverty, equating to 35% of all fuel poor households. This is a sector where reform is long overdue.

Response to questions

1. Do you agree with the government’s preferred position of using new alternative Energy Performance Certificates (EPC) metrics following EPC reform as the basis for higher Minimum Energy Efficiency Standards (MEES) for privately rented homes?

Yes, we do support using the new Energy Performance Certificate (EPC) metrics as this will be the industry standard. The proposed new EPC metrics proposals include a fabric performance measure, a heating system metric, and a smart readiness metric. An energy cost measure is considered but is argued to have drawbacks.  We are not in favour of the energy cost element being removed as for those living in fuel poverty this is an essential consideration. The factors that are presented as reasons for removing the cost metric could be construed as reasons to keep it.  If new technologies result in higher costs this should be acknowledged. If the current methodology does not take into consideration fuel price fluctuations, then the methodology needs revision. If EPCs are fixed for 10 years, then fluctuations in price will not in reality mean buildings fall out of compliance in the short-term.

2. Government would welcome views on options for setting future MEES against a combination of new EPC metrics. Do you agree with the government’s preferred approach of having a primary standard set against the fabric performance metric and then a secondary metric set against either a smart readiness metric or heating system metric, with landlord discretion on which secondary metric their property meets.

We support the emphasis on fabric first being the primary standard and are strongly of the view that until this standard has been met the other metrics should not be considered as a measure of meeting MEES.  From a fuel poverty perspective, a fabric first approach is essential.  We would not want to see the impact of MEES on fuel poverty diluted by the measure losing its focus on reducing fuel costs by improving the energy efficiency of homes through a fabric first approach. The introduction of a heating system metric includes factors that will not necessarily reduce energy costs as the options appraisal acknowledges. The consultation document acknowledges that heat pumps as an example may increase costs  given the current difference between electricity and gas prices. It is understandable that the government want to include measures to reduce carbon emissions but should only support, as part of MEES, measures that do not increase energy costs to fuel poor households.

3. What are your views on the alternative approaches of:

Alternative 1: A requirement to meet a standard set of dual metrics of equal weighting. The standard would be set against dual metrics including two of the following: fabric performance, heating system and smart readiness.

Alternative 2: A requirement to meet an overarching standard set against all three metrics of fabric performance, heating system, and smart readiness, either through improvements across all standards or through landlords concentrating improvements on one or two standards.

The Fuel Poverty Committee would not support this for the reasons set out above. We do not support landlord discretion to choose between metrics that could mean not addressing fabric performance and smart readiness, which are shown in the option appraisal to be most effective optimising energy efficiency and reducing household bills.

4. Do you have any alternative suggestions for how government could utilise new EPC metrics as the basis for MEES, such as a single metric approach (e.g. fabric or cost based?) Please provide a rationale for your answer.

In the proposals on Reforms to the Energy Performance of Buildings EPCs are being redesigned to meet the broader objectives of fuel poverty and net zero. Evaluation of

the addition of heating system or smart readiness measures, can help to reduce energy consumption and costs, but this should be clearly demonstrated in the methodology used for evaluating meeting MEES standards. We support the principles of moving towards a lower carbon more sustainable future, but this should not be at the expense of reducing the impact on fuel poverty.

5. Do you agree with government’s proposal to increase the maximum required investment for the PRS MEES to £15,000 and for landlords to be able to register an exemption if expenditure would take them over this figure?  If not, please set out whether you consider a cap should apply and how; and if so, what level the cap should be set up and why (whether this is the 2020 proposal of £10,000 or another figure). Please explain your answer.

In our 2024 Annual Review a key recommendation was the review of the threshold for investment, and the exemption criteria. We are in favour of raising the threshold and support the proposed increase from 2020 in line with inflation to £15,000 as a minimum. However, we acknowledge that this is a substantial sum for landlords to invest and urge the Government to consider tax incentives to offset investment, for example, offsetting energy efficiency expenditure incurred in one year, against profits made over several future years.  Targeted green financing available to landlords is another potential resource to support landlords to afford the required investment to meet new MEES requirements. The current grant regimes available to landlords also need reviewing.  Our 2024 report gave the example of ECO4 which allows for landlords to access funding but is poorly taken up. The qualification to access ECO4 funding is based on household income which landlords do not necessarily have knowledge of or access to, and which may explain the low take up. If we are to protect fuel poor households from unintended consequences such as rent rises or landlords leaving the sector and selling up, more thought is needed to support for landlords who will struggle to make this investment or pass on unacceptably high rental increases.

The Committee on Fuel Poverty accepts that there are circumstances in which exemptions are a legitimate consideration such as exceeding the cost cap.  However, where this would be exceeded because of the nature of a listed/heritage building, we would expect that the sum up to the cap should be invested to achieve as high an EPC a rating as possible, even if a C-rating is not achievable. We share the Government’s concern about gaming the system where tenants are pressured into refusing third party consent. In principle, we do not support the use of third-party refusals, as this is open to landlord abuse and is difficult to monitor.  The necessary improvement to a home is generational, not simply for the benefit of the current tenants. Instead, tenants should be supported through the inconvenience of this process. At the very least, any tenant refusal exemptions (if allowed) should be subject to regular review.

6. Should the government extend the exemption period for the cost cap for ten years? If not, how long do you think the cost cap exemption should last? Please explain your answer.

Whilst we accept the concern that requirements should be proportionate and balanced a lot can change in a ten-year period. It would be reasonable to review the cap as a response to how well the current proposals have worked in 2031. This would be a five-year period if the implementation date is 2026, as proposed.

7. Do you agree with the government’s preferred implementation timeline to require ‘new tenancies’ to meet the higher standard by 2028 and “all tenancies’ to meet the higher standard by 2030? If not, do you have alternative suggestions?

Yes, in principle. This would be similar to the requirements to meet the current MEES EPC standards which had an earlier date for relets. If the 2026 implementation date is not met, then this may be an unrealistic timeline for the 2028 requirement.

8. Do you agree with the government’s proposal that, as an EPC transition measure, landlords should be able to demonstrate their properties are compliant with the existing standards of EPC E using their past EPC?

Yes. Not to do this would disincentivise landlords from taking early action.

9. Do you agree properties that have an EPC rating of C against EER on EPCs before 2026 should be recognised as compliant with the future standard until their EPC expires or is replaced?

Yes.  For the above reason.

10. Do you agree with the government’s proposal to require landlords to commission a new EPC before taking action to comply with the higher EPC.

10.1. Should the cost of the new EPC be included in the cost cap?

10.2. Should landlords still be required to commission post-improvement EPCs. If yes, should the cost of post improvement EPC be included in the cost cap?

The consultation makes the point that landlords who have a lower EPC may need, under these proposals, to commission a new EPC before the existing one has run out and incur the additional cost. Where this is the case then it would seem reasonable that the cost of the new EPC is included. Where it is no longer current then it should not be included as this argument for including it is no longer valid.

Given the lack of resources within local government departments to enforce MEES a post improvement EPC should be required. This also helps to strengthen the validity of the EPC register.

11. Should government develop an affordability exemption? If yes, what eligibility criteria would be most appropriate for an affordability exemption? Please indicate which, if any, of the proposed approaches you support or otherwise provide alternative suggestions.

There are wide regional variations in rental values and therefore return on investment for landlords. Rather than considering exemptions the government should consider access to grant funding or tax breaks which take rental levels into account either on an individual or local authority area basis. It will be important that properties in some of the poorest areas, with lower rental values, do not lose out to being brought up to a decent standard because of the application of an affordability exemption.

12. Should government apply the PRS MEES Regulations to short-term lets? Please explain your answer.

Yes. For the reasons set out in the consultation; to discourage landlords to changing properties to short-term lets to avoid MEES and other regulations, and to protect tenants and potential tenants from a change to short-term lets reducing supply of longer-term rental properties.

13. What action could government take, including changes to the law to encourage or require smart meters in properties undergoing efficiency upgrades, to increase the number of smart meters installed in the PRS? Please provide your rational and evidence for any suggestion for actions you have.

The government could introduce a requirement for smart meters to be installed as a mandatory component of the smart readiness element of the new EPC standards. Smart meters are generational and current as well as future tenants would benefit from them. The accompanying option appraisal demonstrates the benefits of this as did the responses to the 2020 consultation on MEES. Likewise, prepayment meters, where installed, should always be smart.

14. Do you think the current MEES exemptions available to landlords are suitable?

14a. Are there other circumstances, not covered by the current MEES exemption regime, where you think, government should consider making exemptions for?

The current exemptions apply to a much lower cost cap of £3,500. It is hard to see how high-cost exemption, the wall insulation, or the property devaluation exemptions would in reality apply with the new cost cap of £15,000 and the proposed wider scope of the new EPC requirements (with or without the heating system metric).  If they remain then their use should be kept under review.

We have already suggested that the third-party exemption should be no greater than 5 years before it is reviewed. The current exemption also includes revoking the exemption when the tenancy ends or is assigned to a new tenant, which we support.

15. Do you agree with the government’s preferred position to keep a potential requirement on lettings agents and online property platforms under review whilst the PRS Database is being developed for properties in England?

Yes.

16. Do you have any new evidence to submit regarding topics as summarised in Chapter 2 of this consultation? Please specify which topics you are providing evidence for.

The consultation does not address the question of resources for enforcement of existing or new MEES regulation, apart from with reference to the PRS database contained within the Renters’ Rights Bill.  Effective enforcement is key for a sector with such a high proportion of homes below EPC C. The proposed £30,000 fine for non-compliance should be an effective deterrent, but not if it is perceived to be rarely enforced.  This is an area which needs further work.  Local authorities are best placed to undertake enforcement.

17. Is there any additional information or evidence you would like to provide on either the effectiveness of existing PRS regulations 2015 and guidance, or interaction with other policies.

No. Our evidence submitted for the 2020 consultation remains our position.