60% of the EPC certificates analysed by Savills Research fell below an EPC rating of C under the current metrics with 75% of rural houses being below a C, compared with 58% of urban homes. Achieving compliance with the new standard will be no easy task for rural landlords, particularly as rural homes are also more likely to be further away from compliance (Figure 2). 10% of rural properties analysed are graded F or G, compared to 2% in urban areas.

How the analysis was conducted

Savills Research analysed more than three million valid EPC certificates (2016 to present) from England and Wales^*, which were specifically from PRS houses. Of those, 13% were from regions deemed rural under the Office for National Statistics Rural-Urban Classification.

Each of these certificates provides a current EER and a potential EER, with the potential EER being the grade that would likely be achieved after improvements suggested by the EPC are made. For each of these improvements, an estimated maximum and minimum cost to make the improvement is provided. Within the analysis, Savills Research took the midpoint of these two cost points when determining the investment necessary for each property to reach its potential EER.

^*Due to the formatting of Scottish EPC data, analysis of potential costs was not possible.

The cost of improving an EPC rating increases with the size of the rating gap. While moving from EPC D to C may require only a small number of upgrades, moving from G to C typically involves multiple measures, such as insulation, heating system improvements and renewable technologies. Across all properties analysed, the average cost of improving from D to C was £10,800, compared with £22,500 for improving from G to C.

Costs were consistently higher for rural properties. The average cost of improving from D to C was £13,000 in rural areas, compared with £10,600 in urban areas. For properties improving from G to C, the gap was more pronounced, with average costs of £33,600 in rural areas and £16,300 in urban areas.

Across all non-compliant properties, the average rural cost to achieve compliance is £24,200, compared with £15,300 for urban property. Part of this reflects the characteristics of rural stock, which is often older, more dispersed and harder to improve through simple, standardised measures (Figure 3). For example, our analysis of rural housing found 67% did not have mains gas.

If the distribution of EPC ratings within rural homes was adjusted to match that of urban properties, the average rural cost would fall to £20,700. This suggests that 39% of the gap, or £3,500, reflects rural homes being more concentrated in poorer EPC bands. The remaining £5,400, or 61%, is a cost effect, indicating that rural properties are more expensive to upgrade even when compared with homes starting from the same EPC rating.

Scaled nationally, the rural premium becomes significant. Savills Research estimates that bringing all known non-compliant PRS houses in England and Wales up to standard could cost £27.8 billion in the likely scenario, rising to £37.3 billion in the worst case. The likely scenario uses the midpoint of estimated costs for each suggested improvement measure on an EPC, while the worst-case scenario uses the upper estimate for each measure. Rural homes account for 15.8% of the non-compliant PRS houses analysed, but 22.9% of the likely national bill. That equates to a rural upgrade bill of £6.4 billion in the likely scenario, rising to £8.2 billion in the worst case.

Rural landlords should therefore act early to understand the scale of exposure across their portfolios, identify where improvement is technically and financially viable, and secure available funding where possible, including through schemes such as the Boiler Upgrade Scheme.

The impact of changes

Changes to MEES, particularly the move towards a higher standard equivalent to EPC rating of C, will raise the compliance bar and disproportionately affect rural properties. In a Savills Research survey, estate managers were asked “what is the most likely overall effect of tighter MEES requirements on rural housing?”, 79% predicted the disposal of poorer-performing homes. Only 12% foresaw more investment in existing homes (Figure 4).

Other reforms will add to the compliance burden for rural estates, including the Renters’ Rights Act, the expected extension of the Decent Homes Standard to the PRS, and wider pressure around property condition, safety and tenant standards. These changes mean rural housing is likely to become more demanding to manage, particularly where older, dispersed or lower-return homes already face higher upgrade costs.

But regulation is only part of the story. The introduction of HEM and multi-metric EPCs will fundamentally change how homes are assessed. Here, uncertainty remains. How will the introduction of HEM and the multi-metric EPC affect the rating of properties? Will there be broad equivalence, or a universal downgrade?

The answer is not yet clear, but some change is likely. Even now, a new-build home initially assessed under the Standard Assessment Procedure (SAP) can receive a different EPC when later assessed under the Reduced Data Standard Assessment Procedure (RdSAP), as assumptions replace some measured data despite no physical change to the property.

This will make evidence important. Homes with good records of upgrades, construction details and specification may be assessed more accurately, while homes with poorly evidenced historic works may remain vulnerable to default assumptions.

The new multi-metric EPC system, supported by HEM’s more data-led approach, may expose weaknesses previously hidden by a single EER score, but it should also show whether the main issue is fabric, heating, energy flexibility or cost, giving landlords clearer choices and more flexibility in how they respond.

There are some crumbs of comfort in the new exemption regime. Although the cost-cap exemption rises from £3,500 to £10,000, it will last 10 years and qualifying spend since October 2025 will count towards the cap. The proposed regime also adds a clearer solid wall insulation exemption, allowing landlords to decline it in certain circumstances.

For more information, visit Savills Rural Knowledge Portal, a hub for the latest rural research, market intelligence and sector analysis.

_{Read the articles within Spotlight: Future-proofing Rural Homes below.}