The UK government's Warm Homes Plan, published on January 21, 2026, represents a significant overhaul of private rented sector energy standards. As well as aiming to address fuel poverty, it aims to encourage a move away from reliance on fossil fuels, boost energy efficiency, and contribute to tackling climate change. Backed by up to £15 billion in public funding, the plan sets a single compliance deadline. All privately rented homes in England and Wales must achieve at least an Energy Performance Certificate ("EPC") band C equivalent by October 1, 2030. This is the minimum energy efficiency standard ("MEES"). For portfolio landlords, asset managers, and investors, the implications for capital planning, asset valuations, and compliance strategy are substantial.
The New EPC Framework
From October 2026, the government intends to replace the current single-metric EPC with a multi-metric assessment. Landlords will need to meet a primary standard against the fabric performance metric (measuring thermal efficiency) and a secondary standard, at its election, against either the heating system metric or the smart readiness metric. The energy cost metric will remain on EPC certificates to assist occupier decision-making but will not form part of the compliance standard.
This dual-metric approach is designed to avoid penalizing landlords who install heat pumps which, under the current cost-based EPC methodology, can paradoxically lower a property's rating due to higher electricity costs relative to gas.
Key procedural changes include: requiring a valid EPC before marketing (removing the current 28-day grace period); extending EPC requirements to whole Houses in Multiple Occupation ("HMOs") where a single room is let; and maintaining provisions for short-term lets to be brought into scope in the future.
Key Requirements
Cost cap: Landlords must invest up to £10,000 per property, prioritizing fabric improvements before addressing the secondary metric. The government estimates average per-property costs of approximately £5,400. A review of the cost cap will occur every five years, with the first review after October 1, 2030.
Exemptions: Where the standard is not met after £10,000 of qualifying expenditure, a 10-year exemption may be registered. A "Property Value Adjustment" exemption applies to properties valued below £100,000, capping required spend at 10% of property value. New exemptions have also been introduced for solid wall insulation (where this is the only remaining measure) and for demonstrable negative impacts on building fabric.
Compliance deadline: A single deadline of October 1, 2030, applies to all tenancies. The government abandoned its earlier proposal for phased implementation (2028 for new tenancies), meaning the full compliance burden now falls on a single date.
Enforcement: Local authorities may issue penalties of up to £30,000 per breach, per property. Penalties also apply for registering false or misleading information on the MEES Exemptions Register.
Qualifying spend: Relevant expenditure from October 1, 2025, counts towards the cost cap, enabling early investment to reduce the compliance burden.
Transition Arrangements
Properties holding an EPC rating of C or above against the current Energy Efficiency Rating before October 1, 2029, will be deemed compliant until that EPC expires. This "grandparenting" provision incentivizes early action and provides a compliance pathway without requiring assessment against the new metrics immediately. However, landlords of properties below EPC C must commission a new-format EPC before undertaking improvement works, and a post-retrofit EPC to demonstrate compliance. Both of these costs count towards the £10,000 cap.
Portfolio Considerations
The absence of phased implementation concentrates compliance risk at a single point. For large portfolios, even a modest non-compliance rate could generate material financial exposure given the £30,000 maximum penalty per property, per breach. The expanded EPC scope—covering whole HMOs and potentially short-term lets—widens the compliance perimeter for multi-let blocks and holiday portfolios. The government, however, has indicated it is exploring a potential portfolio approach exemption for larger landlords.
A further consideration is that the transition to multi-metric EPCs may cause properties to be regraded without physical change, as band boundaries shift under the new methodology. Asset managers should factor this into valuations and disposal planning.
For mixed-use portfolios, note that non-domestic properties will retain the carbon-based Environmental Impact Rating as the headline metric, creating divergent compliance regimes within a single portfolio.
Cordelia Sigurdsson, a trainee solicitor in Jones Day's London Office, assisted with the preparation of this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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