Landlords are told energy efficiency pays for itself in higher rent. The honest answer from the research: a better EPC does lift rent, but modestly, and mostly at the top of the scale. The stronger returns sit elsewhere: demand, voids, capital value and, from 2030, the right to let at all. Here's the evidence.

Who pays the bills, and why it matters

In a standard self-contained let, the tenant pays the running costs directly, and rent is quoted exclusive of them. For scale, in mid-2026 the typical energy bill sits around £1,663 a year under the Ofgem price cap, about £139 a month, against an average UK rent of £1,383 a month per the ONS. So energy runs at roughly a tenth of rent on average.

The implication drives everything: in a normal let, the tenant, not the landlord, banks any efficiency saving. That split is at the heart of EPC economics. In a bills-included let, common in HMOs and student housing, the saving is yours and the maths flips in your favour.

The rent premium: real, modest, top-heavy

The most-cited recent figures come from The Mortgage Works, part of Nationwide. Their 2026 analysis found A and B rated homes commanded a rental premium of around 8.1% over a comparable D-rated property in 2025, up from 7% the year before, worth about £85 a month.

Three caveats keep that honest. First, the clearest premium sits at A and B, not at C, the actual compliance target: an independent academic study of the Northern Ireland market found roughly 8.2% for B-rated homes but only 2.4% at C, with the sharper effect being a 4 to 5% discount for E, F and G properties. Second, the effect varies by region and by study. Third, much of the value shows up as avoiding a penalty at the bottom rather than winning a premium in the middle.

Can you add the energy saving to the rent?

Not pound for pound, and the research is fairly clear. Energy efficiency is only partly capitalised into rent: the most direct test, on the Berlin market by Kholodilin and colleagues in 2017, found tenants' willingness to pay is smaller than the energy saving itself, and UK work on the private rental sector reaches the same conclusion. Rent follows local comparables and what tenants can afford, not one property's modelled bill saving. Treat any rent uplift as a possible bonus, not the business case. (For how to price defensibly under the Renters' Rights Act, see Valuation: how to get it right.)

The more dependable benefit: demand

A warmer, cheaper-to-run home lets faster and holds tenants longer. Hamptons estimates a tenant in an EPC C home pays around £499 a year less in energy bills than in a D, and about £1,248 less than in an E. That improves affordability, widens your applicant pool and reduces voids, which is often worth more than a headline rent bump. It matches what tenants say they want: in survey data, 79% say a good EPC matters to them.

The full return case: four fronts

  • Lettability. From October 2030, a sub-C home without an exemption cannot be let. Not a return; the price of staying in the market. It dominates the maths.
  • Capital value. The Mortgage Works found A and B rated homes sell for around 12% more than a comparable D, with C at about 3.7% and E carrying a 1.7% discount. The regional spread is wide, roughly 19% in the North to under 7% in London. A poor rating is increasingly priced in by buyers as a future cost.
  • Running costs and retention. Lower bills, faster lets, fewer voids, and often less condensation and damp to manage.
  • Rent premium. Present, modest, strongest at the top of the scale.

On cost, the average property is expected to need around £5,400 to reach the standard, and many need far less. The quick wins (loft, cavity walls, controls, draught-proofing) often pay back within a couple of years through bills and lettability. The heavy measures rarely pay back on rent alone and are better justified by compliance, capital value and the incoming metrics.

Two things to check before you spend

Not every improvement is treated as an allowable revenue expense for tax; some upgrades are capital rather than repairs, which changes the relief. And exemptions have conditions and registration steps. Confirm both with a qualified accountant and check the current rules before committing spend. The deadlines, cap and exemption routes are in the cornerstone guide: EPC rules for landlords: what you need to do now.

Weighing an upgrade against the rent it supports? Ask us for a free rental valuation.

Figures are the position in mid-2026. General guidance, not legal, tax or financial advice.