Energy efficiency (“retrofit”) is a must for landlords. With the UK government’s minimum energy efficiency standards (MEES) requiring private rentals to meet a minimum of EPC rating E since 2018 - and more stringent measures likely to come - landlords must take proactive measures. A growing emphasis on tackling damp and mould alongside energy efficiency means that compliance is no longer optional but essential for avoiding fines and ensuring the safety and well-being of tenants.  

Improving the energy efficiency of your property is not just about complying with regulations - it's a smart financial decision that can enhance the value of your property, improve tenant satisfaction, and reduce energy bills. Energy-efficient homes are increasingly in demand, and for good reason. Properties that meet or exceed energy efficiency standards can see 20%+ increases in valuations, 10%+ boosts in rental yield, and up to 40% reductions in energy bills for the most inefficient homes. Energy efficiency - retrofit - has benefits well beyond compliance.  

In this guide, we'll explore why energy efficiency matters, the incremental steps you can take to improve your property’s EPC rating, and how working with professionals can make the process seamless and manageable.

Why compliance is critical

EPC E is the Current Minimum, and Councils are Cracking Down 

As of 2018, all rental properties must meet an EPC rating of at least E. Yet there are still over 100,000 properties in the UK that do not comply with these standards. Failure to meet this legal requirement can result in heavy fines -- £5,000 per property or 10% of rentable value to start, rising to £10,000 per property or 20% of rentable value after 3 months, up to a maximum of £150,000. 

The new Labour government’s Warm Homes Plan commits to raising energy efficiency standards to EPC C on all private rentals by 2030, a much stricter requirement. With councils actively inspecting non-compliant properties, landlords must act now to ensure their portfolios meet current and future regulations. 

Damp and Mould: New Legal Focus 

Energy efficiency isn't just about reducing energy costs; it plays a crucial role in the health and safety of tenants. Poorly insulated homes are more susceptible to damp and mould, which are known to have severe health impacts. The new government plans to address these issues more strongly, making it even more essential to ensure your property is adequately insulated and ventilated. This also ensures you're not only compliant but providing a safe, comfortable environment for tenants. 

The Benefits of Energy Efficiency Upgrades

Significant financial returns

While upgrading your property can seem daunting, the financial returns are well worth it. Energy efficient homes can see 20%+ increases in valuations and 10%+ boosts in rental yield. Energy efficiency upgrades can also cut energy bills by up to 40% - making your property more attractive to tenants and more affordable.  

Rent-to-income ratios are rising across the UK – for example, 35% of income spent on rent for the median household in London. UK households spend on average £1.6k a year on energy bills – the “thirteenth month of rent” for tenants. Tenants who enjoy lower energy bills and healthier living environments are more likely to renew their leases, ensuring a steady rental income for landlords. 

Energy efficiency isn’t just a regulatory tick box; it’s a smart investment that pays back both in terms of property value and rental income.

What is a retrofit? What does it cost?

Energy efficiency measures 

First things first – what kinds of measures are we talking about? Energy efficiency, “retrofit,” EPC upgrades – all different terms for upgrades that reduce a home’s energy demand, or switch its energy source to something cleaner.  

Typically, energy efficiency starts “fabric first” – insulating walls and lofts, draughtproofing, and introducing double / triple glazing or secondary glazing. Installing LEDs and heating controls are also “low-hanging fruit” measures to reduce energy demand. They are typically quite cheap and have a fast payback.  

Next, there are renewable energy systems – chiefly, solar power systems or heat pumps. These can have a substantial impact on the EPC rating and cut bills.  

Cost  

You may have read about eye-watering costs to make these upgrades – some sources quote £35-69k per property, a figure well outside of nearly anyone’s budget.  

Upgrading your property’s energy efficiency doesn't need to be overwhelming. It can be done incrementally, starting with simple, non-intrusive improvements that minimise disruption to tenants while still providing significant benefits. You don’t have to do everything all at once.  

Energy efficiency doesn’t need to be wildly expensive. At Domna, we encourage clients to start with “quick wins” – simple measures like cavity and loft insulation or draughtproofing that have big impact at low cost. Many landlords have found success by taking a phased approach to energy efficiency improvements. Start with modest, non-intrusive measures like insulation, solar panels, or a boiler upgrade, and then moving on to more comprehensive measures as time and budget allow. 

Impact on tenants 

One of the major concerns for landlords when it comes to improving energy efficiency is the potential disruption to tenants. Fortunately, there are plenty of measures you can implement that are relatively non-invasive and can be completed with minimal disruption.  

Adding insulation to your property is one of the most cost-effective ways to improve energy efficiency. Insulation can help keep homes warmer in winter and cooler in summer, reducing the need for excessive heating or cooling. Insulating your property can also prevent issues with damp and mould by reducing the buildup of condensation. Cavity and loft insulation can often be installed within a day, without the tenant needing to vacate the property.  

Solar panels are another excellent way to improve your property’s EPC rating and reduce energy costs. Solar energy is a renewable resource that not only cuts energy bills for tenants but also increases your property’s long-term appeal. Solar panel installations are relatively quick and cause minimal disruption, making them a practical upgrade for occupied properties. 

Grant funding is available  

We also work with clients to maximise their grant funding. Most landlords don’t know that energy efficiency works may be eligible for grants through the Energy Company Obligation, Great British Insulation Scheme, or Boiler Upgrade Scheme – schemes delivering over £1bn per year in funded works.

How do I get started?

Energy efficiency upgrades can be daunting. Most landlords don’t know where to start, who to trust, or how much to spend and on what.

The Retrofit Journey: Step by Step 

1. Start with a Non-Intrusive Assessment 

Before diving into upgrades, it’s crucial to understand the specific needs of your property. Domna’s proprietary retrofit assessment tool combines 2.3 billion datapoints to estimate the EPC impact of potential upgrades with 98% accuracy – giving you an accurate overview of your property’s current and potential energy efficiency levels, your options in terms of potential upgrades, and the cost and impact of these (including valuation, energy consumption, CO2 emissions reduction, and energy bill savings). 

This remote, hassle-free assessment helps identify where you can make improvements without the need for extensive physical inspections, making it perfect for landlords who want to avoid tenant disruption. Get a quick, inexpensive sense of what might make sense for you – before spending time and money on deeper assessments.  

2. Complete a PAS2035 Retrofit Assessment 

While an EPC provides a basic overview of your property’s energy efficiency, a PAS2035 retrofit assessment goes far beyond that. This assessment not only complies with all major grant funding requirements but also provides you with a costed estimate of work packages designed to improve your property’s energy performance. It includes a detailed analysis of the property’s insulation, heating, ventilation, and more. 

The comprehensive nature of this assessment makes it the gold standard for planning a retrofit, offering more detailed and practical recommendations than a typical EPC. 

3. Appoint a Qualified, Independent Project Manager 

Once your assessment is complete, managing the actual upgrade work can be daunting. That’s why it’s essential to appoint a qualified, independent project manager to oversee the entire process—from selecting qualified installers to ensuring that the work is completed on time and within budget. A project manager can also coordinate access with tenants, ensuring minimal disruption to their lives. 

Having a professional project manager guarantees that your retrofit will be completed to the highest standards, preventing delays, cost overruns, or shoddy work. 

Unlocking the Value of Energy Efficiency 

The benefits of upgrading your property to meet higher energy efficiency standards are clear: improved tenant satisfaction, reduced energy costs, increased rental yields, and higher property valuations. As councils tighten their enforcement of EPC standards, and with the government poised to push for even stricter regulations, now is the time to act. 

With non-disruptive solutions like insulation and solar panels, grant funding opportunities, and the support of professional assessments and project managers, improving your property’s energy efficiency needn’t be a daunting task. By following a practical, step-by-step approach, you can ensure that your property is both compliant and optimised for the future. 

Whether you’re starting with a simple insulation upgrade or embarking on a deep retrofit, the key is to take action now—because in today’s property market, energy efficiency is no longer a luxury; it’s a necessity. 

• #domna