The UK government is facing mounting pressure to revise its proposed energy efficiency deadlines for private rented homes, as leading financial institutions warn the current targets are unrealistic and risk driving landlords out of the market.

Under current proposals from the Department for Energy Security and Net Zero, all new tenancies would require an EPC (Energy Performance Certificate) rating of C or above by 2028, with all tenancies expected to meet the same standard by 2030. However, both Paragon Bank and UK Finance (the trade body for banks) are urging ministers to abandon or significantly delay these targets, citing insufficient capacity, high upgrade costs, and a shortage of qualified labour.

Paragon Bank estimates that around 60% of private rented sector (PRS) properties in England and Wales are currently below EPC C, with most rated at D or lower. Meeting the 2030 deadline would require retrofitting approximately 1.6 million homes annually—about 2,000 a day, a task the bank says is infeasible given the scale of the retrofit supply chain and workforce limitations. Hitting the earlier 2028 deadline would require double that pace.

“Increasing the delivery timeline and maintaining flexible exemptions allows for a smoother transition to EPC A-C in the PRS, without exacerbating the demand and supply imbalance, which is already expected to grow due to forecast population growth and demographic changes,” said Louisa Sedgwick, Managing Director of Mortgages at Paragon.

Paragon proposes a phased approach instead: 2030 for new tenancies, 2033 for extended tenancies, and 2035 for all tenancies. The bank also recommends reverting to the original £10,000 investment cap and seven-year exemption, and highlights the regional disparities in property efficiency. Homes in the North and Midlands are disproportionately below EPC C compared to those in the South, potentially increasing costs and disruption in those areas.

Echoing these concerns, UK Finance warns that mortgaged rental properties are unlikely to reach EPC C until between 2037 and 2043, far beyond the government’s targets. The group says the challenges are not just logistical but economic.

“The timescale is challenging and overly ambitious, particularly if many properties cannot be improved on time in an economically viable and cost-effective way,” UK Finance stated. It added: “Achieving the 2030 deadline for all tenancies will depend on landlords’ understanding of what improvements need to be made to achieve the standard.”

Compounding the urgency is the Renters’ Rights Bill, which will abolish Assured Shorthold Tenancies. This legislative change is expected to increase the frequency of new tenancies, and by extension, the number of properties affected by the 2028 requirement.

To help ease the transition, UK Finance and Paragon are calling for incentives and support mechanisms for landlords. Suggested measures include:

• Solar panel discounts and better export rates under the Smart Export Guarantee.
• Additional subsidies through the Boiler Upgrade Scheme.
• An expanded Warm Homes Local Grant.
• Stamp duty rebates for energy-efficient upgrades on rental properties.

UK Finance warns that without financial aid, the upfront costs—particularly if paired with a high investment cap—could push many landlords to exit the sector or drastically reduce their portfolios. “This would simply shift the problem into a different tenure, without resolving the key issue,” the body notes.

With the consultation ongoing, both industry groups stress that without a more realistic timeline and targeted support, the government risks destabilizing an already strained rental market.