Tenants want greener homes – but not higher rents

Tenants are increasingly demanding greener homes to rent, but they’re not willing to pay more for them, a survey reveals.

The findings from Leaders Romans Group reveal a big gap between tenants’ desire for energy-efficient properties and their willingness to shoulder the financial burden.

While 80% of tenants support government regulations requiring rental properties to meet an EPC rating of C or higher, only 6% are willing to pay higher rent for these improvements.

This presents a major challenge for landlords; especially as retrofitting costs rise and government support for energy efficiency improvements dwindles.

Tenants won’t pay for improvements

The firm’s national lettings director, Allison Thompson, said: “The desire for greener homes is clear, but tenants are not prepared to bear the financial burden.

“While tenants are eager to see energy efficiency improvements, particularly those that lower utility bills, there is little appetite to pay higher rent for these upgrades.

“For landlords, the cost of upgrading older properties is substantial, and without government-backed incentives, we’re likely to see limited progress toward the proposed EPC targets.”

She adds: “Balancing tenant demand for sustainable homes with the financial realities faced by both tenants and landlords remains a significant challenge.”

EPC rating of ‘C’

One landlord expressed frustration with the proposed regulations, stating: “I own an older property that will cost tens of thousands of pounds to improve from an EPC ‘D’ to an EPC rating of ‘C’. It will take too many years to recover the investment made.”

Another landlord warned of the potential consequences, saying: “If the minimum EPC is raised to ‘C’, landlords like me will sell up rather than spend £50,000 upgrading the property to meet this threshold. I simply can’t face the cost, so to be compliant with the law I will have to evict my tenants. Not a good outcome for the tenants or me.”

Landlords are struggling to finance

The government’s Green Homes Grant, which aimed to retrofit 600,000 homes, was closed prematurely after reaching fewer than 10% of that target.

Most of the remaining support now focuses on low-income households, leaving many landlords struggling to finance the necessary retrofits.

Tenants also expressed concerns about the potential impact of the regulations on their rental costs.

One tenant said: “I think they are really just causing more problems to landlords”, while another suggested that the government should be responsible for funding the upgrades.

Landlords are concerned about the high costs

Recently, the Rightmove Greener Homes Report 2024 found that 50% of landlords are concerned about the high costs of meeting EPC requirements.

Retrofitting properties to meet EPC C standards is estimated to cost landlords an average of £8,074 per property.

Ms Thompson said: “Without government intervention or financial incentives, the adoption of these features will likely remain slow, despite growing interest.

“Collaboration between the government, landlords and tenants is essential to meet the UK’s energy efficiency goals.”

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