What’s the true cost for landlords to get properties to EPC C by 2030?

The other overlooked issue is the additional costs incurred in restoring the property after the upgrades, particularly with internal wall insulation the salesman’s cost ignores all of the new coving, skirting boards, relocation of electrics, redecoration, possible damage to flooring etc. These quickly add up.

Reply to the comment left by Paul Essex at 02/04/2026 – 12:26
Absolutely right. If you are also looking not just at energy storage but also at air or ground source heat pumps there’s also both extra kit required, extra installation, extra plumbing work, and extra work to make good after everything has been installed. And on top of that, in order for any system to work reliably there is a lot of extra time involved in balancing the radiators; these systems aren’t ‘plug and play’ like a modern condensing gas boiler linked to an established central heating system of radiators. There’s extra work everywhere.

Reply to the comment left by Kshitig Tiwari at 02/04/2026 – 11:27
Kshitag, When the new style EPC is available, following the required legislation passage, the recommendations that appear at that time will be the relevant ones. Landlords will need to register the exemption on the “new” PRS register when that becomes available.

Reply to the comment left by Beaver at 02/04/2026 – 10:53
Beaver, I am not able to comment on the tax issues you mention as these are outside of my competences as an Energy Assessor.
However, you mention two other things as follows:-
(1) Cavity wall fill – if the property is in an area of exposure that is designated as severe, then any cavity wall company worth their salt would confirm that the cavity wall fill is not an appropriate solution. If this report comes from a competent installer, this can be used as evidence to register the appropriate exemption. The Government (bless them) do not expect inappropriate recommendations to be carried out where these would detrimentally affect the property. The downside is that you need a reputable competent company/person to be able to report so for the exemption to be applied for.
(2) As far as expenditure is concerned, if any expenditure on a “Relevant improvement” i.,e one that appears on a current valid and in date EPC, occurs or has occurred from October 2025 leading up to 2030 will count as part of the £10,000 cap. So for example if the EPC recommended a Condensing boiler and that boiler was installed say November 2025 onwards to present day at say a cost of £3000, then this £3000 can be offset against the future £10000 cap leaving £7000 as the balance to potentially have to spend in the future. However, Landlords must keep evidence of invoices, install dates, the EPC that they used as the basis of the improvement for the money to be counted towards the future £10000 cap. Now lets say today a tenant’s boiler breaks down, an EPC on that property shows such a recommendation as above. The Landlord, being a good Landlord installs a new replacement boiler as a matter of course, irrespective of the upcoming MEES requirements, then the Landlord can count this expenditure as part of their future cap expenditure. Whilst this is only appropriate where a condensing boiler is recommended, this may be a two for one win situation. Look at the prospect wholistically with planned maintenance/improvements rather than in isolation.

Reply to the comment left by Peter Rowley at 02/04/2026 – 13:33
Peter

A lot of people have had problems with cavity wall installation companies and struggled to find ‘competent installers’.

https://hoa.org.uk/news/cavity-wall-insulation-failures/

And as a consequence, a lot of people have had their properties ruined.

https://www.bbc.co.uk/news/articles/c3w965gz8zgo

The last time the government proposed a mandatory band C+ EPC the expenditure that I had already incurred did not count towards the cap, the date that I incurred the expenditure (thinking that it was for “the greater good”) falling before the date that the government decided my investment as a good landlord should count towards their self-imposed target. And then the government realised that mandatory band C couldn’t be implemented and withdrew the proposal. That’s recent history, but then what we learn from history is that history does repeat itself.

On EPC expenditure today, if what you say is correct, then if you had incurred expenditure prior to October 2025 that would not count towards the current £10,000 cap. And when the goalposts move again probably the expenditure that you incur prior to October 2026 isn’t going to count towards the next cap either. As a landlord there is financial risk to you in spending before you know where and when the goalposts will finally grind to a halt.

The issue with the tax system is that capital expenditure (significant improvements) cannot be written off against your rents as revenue expenditure as you incur them, but have to be capitalised. Ultimately they might reduce your capital gains tax bill if you sell, but in the meantime, if you are not trading as a limited company, you have to use finance for the cost of these improvements, and for many of us this means borrowing. An exception would be double glazing to replace single glazing that HMRC has accepted can be written off against rents, but it is not clear for example whether you would be able to offset the cost of higher performance double-glazing, or triple glazing that was replacing double glazing rather than single glazing. And there are lots of other examples of improvements where it is not clear that you can offset these against your rents as you incur them.

And if you are a non-incorporated landlord then you can now not offset all of your finance costs against rents. So if you have to raise finance for improvements the tax system penalises you as your rents increase. As interest rates rise, the penalties built into the tax system bite even deeper. In fact, the tax system penalises you for energy improvements whether you are a landlord, owner-occupier, or a tenant, because it’s the tenants that end up funding the extra tax bill in higher rents. It’s not that the physics don’t work, or that the technology isn’t there to make homes more efficient; the problem is that it’s the tax system that make it unsustainable. Unless that is you are trading as a limited company. The tax system is skewed to favour the small number of large, incorporated landlords, and biased against landlords and owner occupiers.

Reply to the comment left by Beaver at 02/04/2026 – 14:43
Beaver, as I said previously I am not a tax adviser. However your response does raise certain issues for Landlords in terms of what can be claimed as expenses and what cannot. In the recent release by the Government on MEES they did offer some examples for Landlords to consider whether applicable or not. The guidance is in Annex A of the Government’s recent publication copied below for yours and others to ponder over and to discuss with your accountants.. (Pages 77 to 79)

“Improving the energy performance of privately rented homes Government response:

Annex A: Deductible expenses
What is an eligible deductible expense when changing the energy efficiency of a private rented property?
This guidance applies equally to incorporated and unincorporated landlords. One of the key considerations when deciding whether a repair is a deductible expense is whether it is revenue or capital.
The asset is usually the overall property. The cost of land and any buildings on it is capital expenditure; so is the cost of any new buildings erected after letting has started and any improvements.
One of the key considerations is whether the expense repairs or maintains the asset, or whether it enhances it. It is largely a question of fact and degree in each case whether
Improving the energy performance of privately rented homes
77
expenditure on a property leads to an improvement. Sometimes the improvement may be so small as to count as incidental to a repair: in the absence of other capital indications, the entire cost is revenue expenditure.
The cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials.
Where installation of a heat pump is an allowable expense because it replaces an existing heating system, the deductible expense includes installation of the heat pump, pipes, and the cost of work to install and make good. The relative power of gas boilers and heat pumps are immaterial to the tax position; it is always a question of function. You do not need to demonstrate that a heat pump is equivalent in power to an old boiler, just that it does the same thing.
Capital expenditure may be eligible for capital gains tax relief when a property is sold.
Where expenses are incurred which would usually be revenue in nature, they can still be capital if:
they are part of a larger capital undertaking. For example, extending or altering a property (one house to two flats etc.) will be capital in nature.
the repairs are to a recently purchased, dilapidated property, where the purchase price was reduced due to the repairs required and the property could not be used in the business until the repairs were competed.

Example 1
Person A, a landlord, lets a residential property which has a gas central heating system for heating and hot water. They convert an integral garage into living space, including installing an additional radiator and insulation materials. The expense of converting the garage is an enhancement of the property and is capital expenditure for tax purposes, so cannot be deducted from profits.
Two years later, Person A replaces the heating system for the whole house, installing a heat pump with capacity to heat the entire property (including the garage). Installation of the heat pump and related works are an allowable expense for tax purposes, as it replaces the previous heating system.
If Person A had not installed an additional radiator in the garage when it was converted, the cost of installing the heat pump and adding an additional radiator to the garage would be capital, as it was doing more than the original system, so is an improvement.
Similarly, if Person A installed the heat pump at the same time as converting the garage and added the additional radiator, the cost of installing the heat pump would be capital as it is improvement.
Note that, until March 2027, the materials and installation of heat pumps could be eligible for zero-rated VAT (VAT Notice 708/6).
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Example 2
Person B owns a 2-bedroom stone cottage in a remote rural area with no access to mains gas. The only heating in the property is a wood-burning stove in the kitchen. It has an immersion heater for hot water. The cottage has limited insulation and is normally occupied by tenants year-round. Between tenants, Person B decides to upgrade the cottage’s energy performance.
Person B installs loft insulation. As this is the first-time installation, it is an enhancement of the property so it is capital expenditure for tax purposes and cannot be deducted from profits.
Person B replaces the single-glazed windows with equivalent double-glazed windows. While there is a significant improvement in the performance of the windows, this is because modern materials are being used which are inherently better than the old materials. Installation of the windows and related works are an allowable expense for tax purposes.
Person B installs a low-temperature 7 kW air source heat pump (ASHP) to replace the wood-burning stove and immersion heater. Installation of the heat pump and related works is capital expenditure for tax purposes, as this is installation of the first system of heating air and water.
Due to the intermittent nature of electricity supply in the area and the need for flexible energy use, Person B installs a heat battery to store thermal energy for later use. This is an enhancement of the property so it is capital expenditure for tax purposes, so cannot be deducted from profits.
Note that, until March 2027, the materials and installation for insulation and an air source heat pump could be eligible for zero rated VAT (VAT Notice 708/6).
Example 3
Person C is a landlord who owns and lets three adjacent terraced houses, each with its own gas boiler system providing space heating and hot water. They decide to replace all three boilers with a single shared ground source heat pump system. Installation of the heat pump and related works are an allowable expense for tax purposes, as it replaces the previous heating systems.
If Person C let two of the properties and lived in the third, then they would need to apportion the expense on a just and reasonable basis between the property business and private expenditure.
Note that, until March 2027, the materials and installation for a ground source heat pump could be eligible for zero rated VAT (VAT Notice 708/6).
Example 4
Person D and Person E are landlords who own and let the two flats in a single property, each of which has its own gas central heating system for heating and hot water. Person E is recommended an air sourced heat pump and asks Person D if they would like to share costs of a heat pump installation to be used for both flats. Installation of the heat pump and related
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works are an allowable expense for tax purposes, as it replaces the previous heating systems. The costs should be shared between them on a just and reasonable basis.
Note that, until March 2027, the materials and installation for an air source heat pump could be eligible for zero rated VAT (VAT Notice 708/6).
Example 5
Person F is a landlord who owns a 3-bedroom semi-detached house, which has an aging gas boiler system providing space heating and hot water. The boiler is increasingly unreliable and inefficient. Person F decides to fully replace the gas boiler with a modern heat battery system that provides both space heating and hot water, using off-peak electricity to store thermal energy.
The heat battery system is installed in the same location as the old boiler and connects to the existing pipework and radiators. No additional radiators or heating zones are added.
The heat battery fully replaces the function of the gas boiler, providing equivalent heating and hot water services.
Installation of the heat battery and related works are an allowable expense for tax purposes, as it replaces the previous heating system. Although the technology is different, the function remains the same. The expense includes the cost of the heat battery, installation, necessary plumbing and electrical work, and making good.
Example 6
Person G owns a 4-bedroom detached house that they rent out. Their property was heated by an ageing gas boiler that had become inefficient and costly to run. Person G explored options for upgrading to a low-carbon heating system. Person G applied for the Boiler Upgrade Scheme (BUS) through an MCS-certified installer. Having met the criteria, Person G was successful and chose to install an air source heat pump. The installation was carried out by the MCS-certified installer.
The total cost of installation was £12,500. With the £7,500 BUS grant, their out-of-pocket expense was reduced to £5,000. Person G’s personal investment (£5,000) to install the heat pump and related works are an allowable expense for tax purposes, as it replaces the previous heating system. For tax purposes, the whole cost should be included in Person G’s accounts as an expense.
Note that the personal investment, £5,000 would be counted toward the PRS MEES cost cap, but the £7,500 grant money would not be included in the PRS MEES cost cap.
Note that, until March 2027, the materials and installations through BUS are eligible for zero rated VAT (VAT Notice 708/6).

Reply to the comment left by Peter Rowley at 02/04/2026 – 15:38
And therein lies my point. Some of this is capital expenditure and some of it is very significant capital expenditure because the capital allowances aren’t there.

And most landlords (the small ones) are penalised for raising capital: If you are running your rental business in a limited company this doesn’t affect you much because you are subject to a charge to corporation tax and you can offset all of your finance costs. But the majority of landlords are small, non-incorporated businesses who cannot offset the costs of their capital (although they get a tax credit reducing the tax bill to 20% if their total personal income is less than £50K).

And this means that for many landlords they would be better off not making any short-term EPC improvements but instead waiting until they absolutely have to do something (by which time of course they will know where the goalposts stopped), evict their tenants in order to sell, make any NECESSARY improvements before selling, offsetting their development expenditure against the capital gain. Or they can just make no improvements at all if the numbers don’t stack up and sell to an owner-occupier, who of course doesn’t have to upgrade to band C.

Many non-incorporated landlords have found themselves in a position where as a consequence of being unable to offset their finance costs they have had to raise rents in order to avoid a cash loss – and so the tenant ends up paying higher rents to indirectly fund this additional tax; tenants are only going to end up paying even more rent if the landlord has to raise extra capital to fund EPC improvements.

So it isn’t that the physics don’t work. It isn’t that the technology isn’t there. The problem is that the tax system punishes you for doing it.

Reply to the comment left by Beaver at 02/04/2026 – 11:01
I get the SEG export payment back from the tenant, the tenant gets as much energy they can use during the day, so we both benefit from Solar. I don’t have a battery.

Reply to the comment left by Beaver at 02/04/2026 – 11:47
Hi to all out there, I have a few properties, I have great long term tenants, the renters right bill is an absolute farce, every single decision by the government, the HMRC, Local councils, the media, and corporate finagerlars has simple doubled rents, I did not go into this business to rent my tenants to death, So I don’t, what the the large property companies haven’t worked out that if they own 1000s of houses with no mortgage and still try to charge 2500 pounds per month it’s not going to work, and if they push us small guys out that will negotiate with real people on the bread line there’s going to be a lot of empty houses, the EPC noncence, has anyone actually looked at the EPC details on the sheets, basically if we spend 15k on bugger all we save the tenant a 150 quid year, I’ll just give them 200 quid of the rent, the powers that be gave taken a simple business and booby trapped it for the decent landlord, the fines are not relative to the business legislation, it’s against human rights to victimise a business in this manner look it up, we have been had over and every increase I put on my tenants goes to organisations who have no skin in my efforts to provide for my family and my great hardworking decent tenants that are customers and friends and deserve better than being hood winked into it’s all the landlords, , option 1 on my council housing private rented section , do you want to report a rouge landlord how derogatory to me, what’s option 1 when you ring Westminster for politicians m, any suggestions , the first fine I get, I won’t pay, and will donate to my tenants to pay there rent, I won’t be handing it to the council or the government, good luck to all the decent landlords and there great tenant’s

Reply to the comment left by Pete England – PaTMa Property Management at 02/04/2026 – 20:06
So is that for a HMO? Flat? Semi-detached house, or something else?