How the Renters’ Rights Act and Net Zero Targets threaten older housing stock

The UK private rented sector (PRS) stands at a crossroads. This month, the dual pressures of imminent legislative reform and national decarbonisation targets converged to create unprecedented anxiety for landlords - and tenants.

At the heart of this shifting landscape is a widening structural chasm. On one side sits a modern, highly efficient tier of rental properties, largely compliant with evolving standards, and cheap to run. On the other lies a vast, aging portfolio of pre-war, solid-wall housing stock that risks becoming legally unlettable or financially unviable.

As the industry reflects on the policy rollouts, our Blog explores how the Renters’ Rights Act, alongside stricter energy efficiency mandates, is accelerating a two-tier rental market - and why a coordinated retrofit strategy is the only viable solution.

The legislative catalyst: The Renters’ Rights Act and energy standards

The regulatory environment for UK landlords has fundamentally shifted. While initial policy changes in previous years caused confusion, the current trajectory is explicit: the government is utilising legislative frameworks to drive up both housing quality and energy efficiency, simultaneously.

The government has solidified its commitment to the Warm Homes Plan. This framework signals a return to mandatory Minimum Energy Efficiency Standards (MEES) for the private rented sector. Landlords are facing a firm timeline to raise their properties to an Energy Performance Certificate (Certificate rating) of EPC C.

The Warm Home Discount Scheme will reopen in October 2026. Find out what to do if you did not get your discount for winter 2025 to 2026.

The Renters’ Rights Act factor

The Renters’ Rights Act compounds this energy target by overhauling tenure security and property standards. By abolishing Section 21 "no-fault" evictions and introducing a digital Private Rented Sector Database, the Act creates total transparency regarding property compliance.

Under the new regime, a property’s energy performance, Decent Homes Standard compliance, and health safety metrics will be centrally logged and visible to both local authorities and prospective tenants. Substandard properties will have nowhere to hide.

These parallel regulatory tracks are actively dividing the PRS into two distinct categories:

Tier 1: The compliant, modern portfolio

Properties built within the last twenty years, or those that have already undergone deep retrofits, occupy a privileged position. These assets easily achieve an EPC C rating or higher, often utilising cavity wall insulation, modern double or triple glazing, and efficient gas boilers or heat pumps.

For landlords of these properties, the Renters' Rights Act represents a manageable bureaucratic transition. For tenants, these homes offer lower energy bills and a lower risk of damp and mould.

Tier 2: The inefficient, historical stock

The crisis sits squarely within the UK’s older housing stock -specifically pre-1919 Victorian and Edwardian terraces - as well as inter-war solid-wall properties. These buildings make up a significant portion of the urban rental market in cities like London, Manchester, Birmingham, and Leeds.

Bringing a solid-wall, suspended-timber-floor Victorian terrace from an EPC E or D up to a solid EPC C is a highly complex, disruptive, and capital-intensive architectural challenge.

The scale of the retrofit challenge for older stock

The technical hurdles of upgrading older properties explains why so many landlords are hesitant.

[EPC E/D Historical Property]

├─► Technical Barriers (Solid walls, breathability, heritage constraints)

├─► Financial Capital (£10,000 - £25,000 per property)

└─► Tenant Disruption (Abolition of Sec. 21 limits vacant-property retrofits)

[Risk: Asset Stranding / Market Exit]

Technical obstacles

Older buildings were designed to "breathe." Applying improper, impermeable insulation materials (like standard EPS boards on historical brickwork) traps moisture, leading to interstitial condensation, structural rot, and severe mould issues.

Achieving an EPC C on these properties requires a holistic, fabric-first approach:

• Internal Wall Insulation (IWI) or External Wall Insulation (EWI) using breathable materials (e.g., wood fibre or lime-based renders).
• Suspended timber floor insulation.
• Advanced mechanical ventilation (such as dMEV or MVHR) to manage relative humidity.
• Upgraded glazing that complies with local conservation or heritage constraints.

The financial equation

The average cost to upgrade a solid-wall property to an EPC C rating ranges between £10,000 and £25,000, depending on the baseline efficiency and architectural constraints. With the closure of the Great British Insulation Scheme (GBIS) and the strict targeting of the ECO4 scheme toward low-income, vulnerable owner-occupiers, private landlords are largely left to self-fund these upgrades.

Previously, landlords frequently waited for a tenancy to end naturally - or utilised Section 21 - to clear a property before undertaking disruptive, invasive works like internal wall insulation or floor lifting.

With the Renters’ Rights Act abolishing Section 21 and strengthening tenants' rights to remain, executing major, deep-retrofit works while a property is occupied becomes a logistical and legal minefield.

Market consequences: stranded assets and capital flight

If the regulatory deadlines arrive without a scalable support mechanism for older properties, the UK rental market faces several severe outcomes:

• The rise of "Stranded Assets": Properties that cannot realistically achieve an EPC C due to extreme costs or technical limitations will become unlettable. These assets will depreciate in value, creating pockets of urban decay and reducing the overall volume of available rental housing.
• Landlord sell-offs and consolidation: Small-scale, "accidental," or under-capitalised landlords owning single older properties are increasingly selling up. This stock is often purchased by larger institutional build-to-rent developers or owner-occupiers with the capital to renovate, net-reducing the affordable private rental supply.
• The energy poverty divide: Vulnerable tenants who cannot secure modern, energy-efficient rentals will find themselves trapped in the remaining poorly insulated stock. While landlords may face fines, the immediate reality for tenants will be skyrocketing energy bills and substandard living conditions - worsening health inequalities.

The way forward: strategic solutions for the retrofit sector

To prevent this growing divide from fracturing the housing market completely, the retrofit sector, financial institutions, and policymakers must deploy targeted interventions.

Fabric-first, phased retrofit plans

Landlords must move away from piecemeal, reactionary upgrades. Retrofit coordinators should design bespoke, medium-term retrofit plans compliant with PAS 2035 standards.

Even if a landlord cannot afford a full deep retrofit today, a staged plan ensures that minor upgrades completed now (such as loft insulation and draught proofing) do not conflict with future major works (like internal wall insulation or heat pump installation).

Innovative green finance

The sector requires specialised financial products tailored specifically to the private rented sector.

To offset the split-incentive (where landlords pay for the works but tenants benefit from lower bills), industry providers are increasingly tying their services to government funding and local authority grants (like the West Midlands Combined Authority Retrofit Scheme) - to cover up to 70% of installation costs.

A similar, institutional-scale framework must be deployed for the residential PRS - such as low-interest, property-linked green mortgages, or tax-deductible retrofit allowances.

Supply chain scaling and localised delivery

As highlighted at the National Retrofit Conference, local delivery is key. The retrofit supply chain must expand to lower delivery costs through economies of scale.

Local authorities should utilise the upcoming Private Rented Sector Database (scheduled to launch in late 2026 as part of Phase Two of the Act’s implementation), to identify clusters of inefficient housing, and partner with local retrofit businesses to offer street-by-street upgrade programs, drastically lowering setup and material costs.

An unprecedented opportunity

The Renters’ Rights Act, and stricter energy efficiency mandates, represent an adjustment period for the private rented sector.

For landlords, upgrading older stock is no longer an optional sustainability goal; it is a fundamental requirement for asset preservation.

For the retrofit industry, the mission is clear: deliver scalable, cost-effective, and technically sound solutions to bridge the divide.

Ultimately, bridging this rental divide is not just a compliance box to tick - it is the definitive blueprint for the future of British housing.

Carl Dodd, Property Revolutions Ltd.