Dan Alvarez, group chief revenue officer at Vertical, outlines the implications of energy efficient homes for those operating in the energy and housing sectors, why this is significant, and how the rental market is rapidly changing
The government’s Renters’ Rights Act 2026 is being positioned as one of the biggest legislative changes in the private rental sector in decades.
With the abolition of Section 21 “no fault” evictions, stronger tenant protections and increased accountability for landlords, the reforms are designed to help to rebalance power in the rental market and improve housing standards across the UK.
However, while much of the conversation has focused on legal rights and tenancy security, the ever-present issue of energy efficiency in rental properties remains.
As landlords face mounting pressure to provide higher-quality homes, the reforms could accelerate the divide between modern, energy-efficient properties and older, inefficient rental stock that is becoming increasingly expensive to maintain.
Why are landlords who invest in energy efficient homes winning?
The biggest winners from the reforms are likely to be landlords who have already invested in upgrading their properties.
Homes with modern heating systems, improved insulation, smart energy controls, and lower running costs are becoming more attractive from both sustainability and financial perspectives.
Today, affordability for tenants is about more than just the monthly rent, as they must pay closer attention to the overall cost of living for a property. A major element of this is energy bills.
For landlords who invest in energy efficient property upgrades, this creates a major competitive advantage.
Efficient homes can help:
- Reduce tenant turnover
- Minimise complaints around damp and cold
- Improve tenant satisfaction
- Lower maintenance risks
- Futureproof properties against tightening regulations
The reforms have driven this shift, with it expected to further encourage a more professionalised rental market, as tenant expectations continue to rise and better quality homes are likely to see stronger demand.
How can tenants benefit from lower running costs?
For renters themselves, the reforms could bring benefits beyond greater security and protection from energy efficiency protections.
Warmer and more efficient homes often mean significantly lower utility bills, a consideration that is becoming more important than location and price for renters during the cost-of-living crisis.
A cheaper rental property with poor insulation and high heating costs may ultimately prove more expensive to live in than a slightly higher-priced property with lower monthly energy bills. Tenants are more aware of EPC ratings, heating system efficiency and overall running costs of rental properties.
This shift in consumer behaviour is expected to place additional pressure on landlords with inefficient properties to upgrade or risk falling behind the market.
What happens to the inefficient rental stock?
While some landlords are well-positioned for the reforms, others may face growing challenges if they do not make changes quickly.
Older homes with poor insulation, outdated boilers, inefficient radiators, mould issues or low EPC ratings could become increasingly difficult and expensive to operate.
Coupled with this, tightening compliance standards provide tenants with more confidence to challenge poor living conditions, with landlords who delay upgrades potentially facing:
- Higher maintenance costs
- Increased void periods
- Reduced tenant demand
- Greater financial pressure to upgrade
Many smaller or accidental landlords may ultimately decide the risks and costs of remaining in the market outweigh the benefits. These pressures could trigger a gradual reduction in available rental stock, particularly among ageing properties that require significant retrofit investment, delaying landlords’ ability to make a profit.
Looking at the wider sector, we have seen that these changes have triggered a substantial need for practical retrofit support, offering landlords guidance around improving their property’s heating performance.
Could rental reform reduce supply?
One unintended consequence of the reforms could be a reduced supply in the private rental sector.
The risk of landlords leaving the market rather than invest in improvements means that renters may face fewer available homes and increased competition for high-quality properties.
This could put upward pressure on rents in certain areas, widening the divide between “futureproofed” rental homes and properties that are becoming economically unsustainable.
Have energy efficiency concerns changed the rental market?
Energy efficiency concerns for landlords have shifted. Investing in efficiency upgrades was once viewed as a sustainability “nice to have”, but now these are a commercial necessity for landlords trying to remain competitive, compliant and financially viable in the changing market.
As the market evolves, regulations and rights for tenants increase, landlords can expect their properties to be under more scrutiny, and should invest in:
- Energy-efficient heating systems
- Retrofit solutions
- Smart controls
- Insulation upgrades
- Technologies that help reduce household energy costs.
The general rental market is entering a period in which property standards, affordability, and energy efficiency are becoming standard requirements.
Landlords who wish to remain in the market must be quick to adapt and willing to invest in futureproofing their homes’ efficiency.
The post Why energy efficient homes could decide the future of the rental market post-Renters’ Rights Act appeared first on Planning, Building & Construction Today.
