How lenders can help landlords become more sustainable in an era of new regulations.

There is no industry that is immune to climate change, and it is a problem that each must adapt to.

Property is one of the most prominent examples. A substantial proportion of the UK’s carbon emissions is attributed to residential real estate, and this sector is increasingly subject to government regulations that will encourage a faster shift toward sustainability.

A change in Energy Performance Certificate (EPC) ratings in April 2025 will force almost three-fifths of all homes (58%) to improve their energy efficiency if they are to be rented out on the private rental market.

A fine of £30,000 for noncompliance will force many landlords to make substantial investments into their properties in order to comply. In spite of this, these renovations should be viewed as an opportunity and not a legal requirement.

Accordingly, as 42% of renters and 82% of buyers indicate they will pay more for energy-efficient homes in the future, landlords will have the opportunity in coming years to simultaneously combat the effects of climate change and enhance the marketability of their properties.

With this in mind, what are the upcoming regulations landlords need to know, and how can lenders help to increase the overall sustainability of the property market?


A 25% reduction in energy consumption can be achieved by improving the insulation of walls alone, and this percentage will rise with the installation of more energy-efficient windows.

Therefore, landlords can expect to incur lower maintenance costs since their properties will be less susceptible to mould growth.

Performing this type of renovation will most likely place a strain on the landlord’s financial resources. Nevertheless, increasing the insulation of the property is likely to reduce the property’s energy costs, which should facilitate attracting and retaining tenants. Encouragingly, 18% of renters say they would pay more rent if new windows were installed.

Given that houses with sustainable features sell for an estimated premium of £40,000, it is evident that landlords should expect to increase their profits by upgrading insulation.

Electricity usage:

There are simpler changes that can be implemented, such as replacing light bulbs and upgrading boilers.

The replacement of old inefficient boilers with new condensing boilers can increase efficiency by 34% and reduce tenants’ fuel bills by 30% on average.

As a result, 15% of renters would pay more rent if a high-efficiency boiler and heating system were installed, and as condensing boilers become the norm, spare parts and repairs will likely become more costly.

By replacing old bulbs with new Energy Star LEDs, you can cut energy consumption by 75% and increase their lifespan by 25 times.

So, landlords are able to reduce maintenance costs and tenant energy bills by replacing old lightbulbs and boilers, resulting in greater profitability and, hopefully, happier tenants in the long run.

Potential obstacles:

But there are issues to be addressed. There is a concern among the Association of Residential Letting Agents that the cost of renovations, combined with the proliferation of green finance, may exclude some landlords from the market, creating an environment of ‘eco-privilege’.

The costs of expensive improvements may not have a significant impact on the finances of affluent landlords and, in fact, they may benefit in the long run as they gain access to favourable green mortgage rates.

The upfront investments they make will result in lower heating and maintenance costs for their properties.

Landlords who cannot afford the renovations outright, will not be able to access ‘green’ finance and will be obligated to pay higher mortgage rates.

How lenders can help

As with any new market trend, educating landlords about their options is critical.

In the lead-up to regulatory changes, landlords should work with their lenders to come up with a more realistic timeframe that will spread the cost of renovations over the next few years. This should allow less affluent landlords to renovate within their means.

Certainly, lenders with expertise and experience should be available to facilitate the expansion of energy-efficient features for landlords.

It can therefore serve as a remedy to the problem of ‘eco-privilege’.

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