EPC reform and the Home Energy Model

If you rent out a home in England or Wales, there are two related changes to understand: a new way of assessing energy performance, and a planned increase in the minimum standard for privately rented homes. The Home Energy Model will change how EPCs are calculated. The policy aims for C or equivalent by 1st October 2030.

The practical starting point is to check your existing certificate, understand your likely route to compliance and keep evidence of suitable improvements. The higher standard is government policy, but it still needs implementing legislation; the final technical scoring and some transition details remain outstanding.

What is changing and when

Reformed domestic EPCs are now targeted for the second half of 2027. The government moved the launch from October 2026 in its update of 9th March 2026. The exact launch date should be checked against subsequent official announcements before arranging an assessment.

The planned higher rental standard has one compliance date, 1st October 2030, for both new and existing tenancies within scope. The current EPC E requirement continues in the meantime.

What is the Home Energy Model

The Home Energy Model, usually shortened to HEM, is the government’s replacement calculation framework for assessing a home’s energy performance. For existing homes, an on-site assessment will provide information for the new method rather than the current Reduced Data Standard Assessment Procedure, or RdSAP. Landlords will still obtain an EPC through an accredited assessor.

The reformed certificate will give a broader picture through four headline measures.

FABRIC PERFORMANCE describes how well the building retains heat.

THE HEATING SYSTEM measure addresses heating performance and the move towards cleaner heating.

SMART READINESS assesses the capacity for generation, storage and flexible electricity use.

ENERGY COSTS provides an estimate of running costs. These are modelled assessments, rather than a promise of a tenant’s actual energy bill.

Government has confirmed the four measures, but the detailed calculations, band boundaries and technical requirements are the subject of the HEM EPC consultation, which closed on 18th March 2026. Do not assume that one particular product will guarantee C, or that every measure will receive an A–G band: the consultation proposed displaying energy cost in pounds.

Which measures must a rental home satisfy

The planned approach puts fabric first. A landlord would bring the fabric performance measure to C or equivalent, or establish a valid exemption, then meet the secondary standard through either the heating system or smart readiness measure. The landlord chooses the secondary route.

This means the policy does not automatically require a heat pump in every rental home. Suitable insulation, heating or smart measures must be considered for the individual building. Solar panels, batteries and smart controls may be relevant, but a smart meter alone should not be treated as a guaranteed route to C. Final scoring and professional advice will matter.

What if your property already has EPC C

The government plans to recognise homes with C or above on the current Energy Efficiency Rating, or EER, obtained before 1st October 2029. Those properties would meet the higher standard until that EPC expires or is replaced. Reformed EPCs will also retain the EER as a legacy measure for a period, so the transition is not limited to certificates issued before the new format launches.

This is often called grandparenting. It is tied to the particular qualifying certificate and is not permanent protection for the property. EPCs will retain a ten-year validity period, including after reform. When the qualifying certificate expires or is replaced, the property must be assessed against the new requirements, with improvements or a valid exemption where necessary.

An EPC D or E does not qualify for this route. For the new-metric route, the planned requirements include commissioning a reformed EPC before improvements, then another after works to demonstrate compliance by the deadline. Ask for advice before replacing an EPC on which you expect to rely for transitional protection.

How much will landlords need to spend

The announced maximum required investment is £10,000 including VAT per property, covering both required measures together. It is a ceiling, not a fixed bill: a property that meets the standard for less would not need the full amount spent. Where value is below £100,000, a property value adjustment exemption would reduce the spending requirement to 10% of the property’s value.

Qualifying spend from 1st October 2025 can be recognised. During the transition to 30th September 2029, recommended measures under an existing RdSAP EPC can count, except spending on fossil fuel heating installations. Keep the recommendations and proof of installation and payment. Existing expenditure cannot simply be claimed again for successive exemptions.

Certain third-party funding counts towards the cap, while Boiler Upgrade Scheme funding is excluded. Reasonable costs for the two EPC assessments required by the new-metric compliance route and some specialist retrofit advice would also be allowed, with detailed limits to be set in legislation. Check grant eligibility and funding conditions before committing to works.

What exemptions are planned

An exemption must meet the relevant conditions and be registered; an expensive or difficult project is not automatically exempt. The government’s intended categories are:

• High cost — even the cheapest recommended measure exceeds the spending cap.
• All relevant improvements made — no further recommended or approved improvements are possible, but the property remains below standard.
• Cost cap — the permitted investment has been reached, or the next cheapest measure would take the total over it.
• Property value adjustment — a reduced spending requirement for lower-value homes.
• Solid wall insulation — a specific option where this is the only remaining fabric measure and the landlord chooses not to install it.
• Negative impacts — evidence that a measure would adversely affect the building.
• Third-party consent — necessary consent is refused, for example by a tenant, freeholder or planning authority.
• New landlord — a six-month grace period for acquiring a stake in a property with tenants already in place.

Cost cap, property value adjustment and negative impacts exemptions are intended to last ten years. Most other categories last five years, subject to specific exceptions. A measure-specific exemption still leaves other suitable measures to consider within the cap. Review the property again when an exemption ends.

The current law still matters

Homes within current domestic MEES must be at least EPC E, unless there is a valid registered exemption. The existing improvement cap is £3,500 including VAT and the total MEES penalty limit is £5,000 per property. An F or G property requiring action today cannot wait until 2030. EPC provision is a separate legal obligation with separate enforcement.

MEES scope depends on the tenancy and the legal requirement for an EPC. Standard private residential lettings are generally covered, but unusual tenancies and buildings need an individual check. An EPC normally lasts ten years and must be provided free to prospective tenants.

Under the higher standard, government plans a maximum financial penalty of £30,000 per property per breach. False or misleading information on the exemptions register could also attract a penalty. Local authorities would enforce the higher rules. These increased sanctions depend on legislation.

HMOs heritage homes and holiday lets

Government intends to require a valid EPC at the point of marketing, a whole-building EPC when an individual HMO room is rented, and certificates for short-term rental properties regardless of who pays the energy bills. It also intends to remove the heritage exemption from EPC requirements. These are planned scope changes, subject to regulations and transition arrangements.

Requiring a certificate does not mean every recommendation must be installed. Heritage and other sensitive properties still need suitable advice and any necessary permissions. Short-term lets are not currently included in the planned higher PRS MEES requirement, although government will keep that position under review. Transitional arrangements for homes newly brought within EPC scope, and whether valid EPCs will be required throughout ongoing tenancies, still need final clarification.

A practical plan for your rental property

• Build an EPC record for every property: rating, expiry date, recommendations and registered exemptions.
• Address any current compliance gap first. For D and E properties, compare an early EER C improvement plan with the future new-metric route.
• Obtain advice from an accredited assessor or qualified retrofit professional before choosing measures. Consider moisture and ventilation alongside insulation, and check permissions for flats and heritage buildings.
• Get itemised quotes and plan suitable works around access and void periods. Government recommends accredited installers and appropriate retrofit standards; the announced policy does not require a particular installer for every upgrade.
• Keep invoices, photographs, specifications, advice, consent correspondence and grant records. Set reminders for EPC and exemption expiry.
• Review final regulations, band boundaries and official guidance before major spending and before relying on an exemption or the transitional route.

Crown Rentals can discuss the EPC position for your property and help you plan your next steps. Contact us with your current certificate and any recent improvement records.

The current legal framework is the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and the Energy Performance of Buildings (England and Wales) Regulations 2012, both as amended. The new standard requires further legislation.