UK Finance has submitted evidence to the government as part of its consultation to reform Energy Performance Certificates (EPCs), calling for a joined-up approach to prevent making people property prisoners and creating complications for lenders.
UK Finance wrote to the Ministry of Housing, Communities and Local Government and Department for Energy Security and Net Zero, saying it supported “as much coordination as possible” and urging the introduction of standardised policies to reduce “unnecessary complications and costs for mortgage lenders” and consumers.
The body said the proposed reforms were “wide-ranging and ambitious”, but noted that the government may struggle to deliver all the metrics and changes outlined in a short time.
It suggested starting with a minimum viable product reform before developing a long-term solution for measuring and managing the energy performance of properties.
UK Finance said the reform would require an “extensive education campaign” to give stakeholders necessary information and guidance, such as a consumer-focused campaign on how the new system works, guidance on improving EPCs, available funding options and access to trusted tradespeople, and explanations of jargon.
It also suggested the government work to “address the proliferation of inaccurate and fraudulent EPCs, to address the current lack of trust over the EPC accuracy”.
Market Moves
Sponsored by Halifax Intermediaries
UK Finance welcomed the proposed changes, saying the current metrics could be “unhelpful” in capturing or encouraging the reduction of emissions and could lead to misaligned incentives, such as not recognising newer heating technologies.
It said any metrics used should be comparable across the UK, so mortgage lenders can have a UK-wide understanding of their book and meet environmental requirements.
The body recommended splitting metrics by core and secondary measures, such as including the energy cost rating and heat retention in core measures and using heat pump and smart meter readiness, as well as solar and insulation installation as secondary measures.
It said an energy cost rating could help consumers improve energy efficiency, while heat retention data would help them understand the fabric performance of their property.
This would make metrics clear and comparable, UK Finance suggested.
It also said the greater complexity of EPC measurements should be balanced with rising costs, as the current sub-£100 cost of a certificate was beneficial. It suggested additional costs being borne by the private rental sector, as there were more EPC requirements and penalties for non-compliance.
The responsibility of consumers in improving energy efficiency should be clear, UK Finance said, and EPCs must account for technology types that improve low-carbon energy performance but may not relate to energy efficiency better. It said this could include how gas boilers are rated compared to heat pumps and ensuring an EV charger does not negatively impact an EPC.
It noted the proposal to replace the Standard Assessment Procedure (SAP) and Reduced Data SAP (RdSAP) methodologies with the Home Energy Model in the second half of 2026 and said this should be supported with suitable methodologies and reflect recommendations made by the government.
It said there could be a gap in the validity of EPCs while the sector transitions to the Home Energy Model, so the government should guide firms on this. It suggested current EPCs remain valid until 2030 or their original validity period.
A smooth EPC transition
UK Finance said EPCs should be maintained and updated regularly, and a 10-year validity period was seen as too long by some firms, as there was a risk it would not keep up with improvements and technological developments.
It also said infrequent updates would not be properly linked to the government’s milestones. However, there will be a cost if the 10-year validity period is reduced on all properties, so UK Finance suggested a “proportionate focus” and “effective prioritisation”.
The body raised concerns that EPC reform would negatively impact the measurement of homes subject to regulatory requirements, such as minimum energy efficiency standards in the private rented sector (PRS). It said a clear, established transition was needed to avoid this.
The government should consider the costs and benefits of different policy options to accelerate the coverage of EPCs, UK Finance said.
This could include updating the EPC when there is a change in technology – such as the installation of heat pumps – when there is a change in ownership, tenancy or at remortgage, and when building works are done.
It also said EPC ratings could be updated in a dynamic way to reflect changes in cost and emissions, even if energy consumption, smart readiness and the fabric of a property has stayed the same, and recommended continuing to use existing data from previous EPC assessments.
UK Finance said while it welcomed the planned reform, this should be linked to the wider changes and the government’s Warm Homes plan.
It said: “Without this joined-up approach, we are concerned that some proposals, such as minimum energy-efficiency standards or any EPC requirements for lenders’ mortgage portfolios, could lead to unintended consequences or fail to support the desired objectives.
“Our members believe that there is a risk of driving the wrong behaviours where lenders focus on ‘cherry-picking’ the best stock. There should be careful consideration given to the potential creation of property prisoners, especially those with lower incomes and in properties unable to reach A-C EPC ratings.”
UK Finance added: “Encouraging lenders to lend to high-energy-efficiency homes will inevitably create a favourable lean towards lending to new-builds, consequently disincentivising lending to existing properties in need of retrofit.”