"We support the Government’s Net Zero target and understand the need for strengthening policy and regulation to drive climate action, but we would strongly urge that a longer term and more balanced approach is taken to allow the retrofit supply chain to grow"
- Louisa Sedgwick - Paragon Bank
Paragon Bank is urging the Government to phase in new energy efficiency standards for rental homes to reduce disruption in an already strained lettings market.
In its response to the Government’s Improving the Energy Performance of Privately Rented Homes consultation, Paragon is asking for the proposed 2030 minimum Energy Performance Certificate (EPC) C requirement to be replaced with a staggered approach:
2030 for new tenancies
2033 for extended tenancies
2035 for all tenancies
The current proposal from the Department for Energy Security and Net Zero suggests 2028 for new tenancies and 2030 for all. Paragon warns this timeline is too short, risking a landlord exodus and further constraining an undersupplied market.
About 60% of private rental homes in England and Wales are currently rated EPC D or below, and Paragon estimates that 1.6 million properties would need to be upgraded every year to meet the 2030 goal. That’s roughly 2,000 retrofits per day, doubling to 4,000 if the 2028 date is upheld.
Paragon’s research, conducted by Pegasus Insights, surveyed nearly 900 landlords and found just 17% believe 2030 is a realistic deadline. Meanwhile, tenant demand remains high, with 73% of landlords reporting continued strong interest. Zoopla’s latest rental report backs this up, with tenant demand 79% above pre-pandemic levels and available rental stock 22% lower.
Paragon is also calling for additional policy support to help landlords meet the targets, including:
Restoring the original £10,000 investment cap and seven-year exemption
Introducing incentives such as a Warm Homes Grant
Aligning EPC reforms with the Energy Performance of Buildings regime
Funding skills and training to ease labour shortages in the retrofit sector
Recognising regional differences, particularly the North and Midlands, where older housing stock presents greater challenges
“Rushed legislation could cause significant disruption to a PRS that will already be adapting to the new Renter’s Right Bill, forcing some landlords to sell because they cannot complete works in time,” said Louisa Sedgwick, Paragon Bank managing director of mortgages. “Adopting a more considered and realistic timeframe will give landlords more capacity to adapt their properties, allow the retrofit supply chain and labour force to grow and, ultimately, will be more beneficial for tenants.”
“We support the Government’s Net Zero target and understand the need for strengthening policy and regulation to drive climate action, but we would strongly urge that a longer term and more balanced approach is taken to allow the retrofit supply chain to grow."
“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.”
