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Energy-Efficiency Rules Unlikely to Cause Mass Landlord Exit, Report Finds

A new report from the Resolution Foundation suggests that incoming energy-efficiency requirements in the private rented sector (PRS) are unlikely to result in a mass exodus of landlords. The report highlights that while some landlords operating on narrow margins may leave the market, large-scale exits are not expected.

The Resolution Foundation’s latest housing outlook found that private rented homes in England are currently the worst-performing in terms of cost, property size, and quality. The report notes that the Renters’ Rights Act could help improve the quality of private rented homes, with requirements for energy efficiency by 2030 and a new Decent Homes Standard expected in the mid-to-late 2030s.

According to the report, 47% of homes in England do not currently meet the proposed Decent Homes Standard. The typical cost to upgrade a property to an Energy Performance Certificate (EPC) rating of C is £9,000, which is around 75% of the median annual rental income for landlords with a single property. Despite these costs, the report states that, as with previous energy-efficiency regulations, widespread landlord departures are unlikely.

The report also observes that the size of the PRS has stabilised since 2015, and it is unlikely to return to early 2000s levels as quickly as it grew. Previous increases in tax and policy changes have not led to a reduction in the number of private rented homes, and only a small number of tenants have moved into social housing. The Resolution Foundation suggests that any net outflow from the PRS is more likely to be tenants moving into homeownership, though this remains challenging due to high house prices relative to income.

The report further notes that the number of renters aged 65 and over is expected to rise from 4% in 2022 to 13% in 2040. The PRS has doubled over the past 25 years, now housing 12.9 million people in 5.2 million households, with more young families renting. The Renters’ Rights Act is described as placing “guard rails in a largely unregulated market,” but the report acknowledges that it cannot address all issues in the sector.

The Resolution Foundation plans to conduct further research on the PRS over the next year to identify policies that could improve living standards for tenants.