Campaigns Environment, Safety and Standards

Energy Efficiency: Government rejects plans to increase cost cap to £5k

Victoria Barker
Written by Victoria Barker

Landlords with properties that have an energy performance rating of F or G will not be expected to pay up to £5k in order to improve the energy efficiency rating of the property, after a recommendation to raise the cap was rejected.

A proposal to increase the cost cap (which is currently £3500) was put forward by the Department for Business, Energy and Industrial Strategy (BEIS) select committee earlier this year in its report “Energy efficiency: building towards net zero: Government. 

However, responding this report and this recommendation last week, the Government rejected to proposal to increase the cost cap.

In the official response, which can be read here, the Government said:

“The consultation on amending the Minimum Energy Efficiency Standard Regulations which ran from December 2017 to March 2018 proposed capping the amount of landlord contribution to £2,500 per property. However, in recognition of consultation responses and informed by additional modelling and analysis undertaken for the Final Impact Assessment, we concluded that setting the cap at £3,500 would strike a good compromise between ensuring a meaningful number of EPC F and G private rented sector properties are improved, while protecting landlords from excessive costs.

“Modelling showed that a cap of £3,500 would enable 48% of EPC F and G properties to be improved to EPC E (as opposed to the 32% indicated at the consultation stage) with the remaining 52% all able to make some level of improvement while not reaching EPC E. Our analysis showed that the average cost of improving an F or G rated domestic private tented property to EPC E is likely to be around £1,200, while the average cost for those making as much progress as possible towards Band E is estimated to be £2,000.

Minimum Energy Efficiency Standards

Since 2018, it has been a requirement for landlords entering into new tenancies to make sure that their rental properties have a minimum energy efficiency rating of an E (unless they qualify for an exemption)

This requirement will also apply to private landlords for existing tenancies from April 2020. The majority of landlords will be unaffected by the change, because their properties will already be compliant.

Learn more about energy efficiency

About the author

Victoria Barker

Victoria Barker

Victoria is the Communications Officer for the RLA.

She is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and media review, and creating social media content. She also contributes to our members magazine, Residential Property Investor.

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