Why fair retrofit is smart business 

As the UK government pushes to upgrade around 5 million homes by 2029 through the £15bn Warm Homes Plan and a reformed Decent Homes Standard (DHS), the stakes are high for tenants and businesses alike. 

Within this context, the private rented sector (PRS) plays a critical role. With 4.9 million properties in England alone, the PRS accounts for around 19% of all UK households and millions of residents – young workers, families, older adults, and essential workers – supports labour mobility and underpins part of the economy. Yet tenants face acute pressures: rents and bills continue to rise and supply of genuinely affordable homes is limited. In this environment, expanding housing energy performance standards – for example via Minimum Energy Efficiency Standards (MEES) implementation – can provide critical relief but, without clear social protections, risks undermining both the human rights of tenants, and the market. 

As energy efficiency becomes integral to what constitutes a “decent” home, the way costs and benefits of retrofit are distributed between landlords and tenants becomes a central market and fairness question, not a secondary one.

Tenant insecurity and the risk of renoviction

Tenants feel increasing insecurity in relation to retrofits and home improvements. A survey, by ACORN the Union, revealed that while 91% of tenants express a desire for energy efficiency retrofits, 70% maintain that engaging with landlords on this subject would result in retaliatory action, specifically eviction or a substantial rent increase.

“Renoviction”, tenant eviction by landlords for retrofitting, therefore remains a live issue. The reformed Renters’ Rights Act (RRA), coming into force on 1 May 2026, will significantly reduce their likelihood by abolishing Section 21 “no-fault” evictions. However, renoviction avenues remain open:

• Landlords can seek possession of a property on the grounds of substantial redevelopment or demolishment, providing four months of notice and justification in court.
• While rental increases can only be made once in any 12-month period, there is no cap on how much those increases may be beyond a “fair and reasonable” test and market rate alignment.

The split incentive

With the expected renovation wave, millions of landlords and tenants will be facing the difficult “split incentive” issue: retrofit costs are borne by landlords, but the lower bills benefit tenants. If a leaky home is improved, is it fair to increase its rent? If so, by how much?

The RRA envisages that rental increase be resolved in a First-tier Tribunal, but this creates uncertainty and backlogs. The convergence of the Warm Homes Plan, MEES expansion, the RRA and the reformed DHS makes clear guidance on post-retrofit rent-setting unavoidable.

The government should issue clear guidance on how energy efficiency improvements should be reflected in permitted annual “market rate” rent increases, providing greater reassurance to tenants and landlords alike. The International Union of Tenants has long championed the “housing cost-neutrality” principle: rents can increase, but only by the amount that energy bills will go down. This could offer a fair and transparent approach.

Gaps in current protections

Currently, when retrofits are funded by the government’s Warm Homes: Local Grants (WH:LG), rent increases are prohibited. However, greater clarity is needed on the duration and scope of the rent freeze, and whether it extends across successive tenancies. If it doesn’t, unscrupulous landlords would have a disproportionate incentive to seek repossession of homes in advance of undertaking the works, rather than retrofitting while keeping the tenants in their homes.

Without these two safeguards in place, the retrofit wave risks catastrophic effects on people, but also on businesses: undermined public support for renovation, project delays, destabilised markets and political risk that ultimately affects investors, lenders, property managers and delivery partners. Everyone loses. This is why businesses should champion sensible protections on rental increases and against tenant displacement – not as charity, but as sound commercial strategy.

Regulatory certainty is a commercial asset

Large organisations do not baulk at regulation; they do at uncertainty and uneven playing fields. Policies like MEES, RRA, and DHS must be seen as fair, not capricious. If tenants feel unfairly priced out after retrofit work, the political response can be swift and severe, inviting litigation, community opposition, and policy reversals that hurt market confidence.

Clear frameworks and guidance that determines post‑retrofit increases creates certainty and levels the playing field between different actors. Investors can price risk more accurately, lenders know what to underwrite, and tenants have confidence to stay in homes that are improving.

This is not about imposing blanket rent controls – landlords require incentives or they will not act beyond statutory requirements. It is about proportionate and time‑limited rules that reflect the public value which underpins retrofit work.

Respecting human rights aligns with commercial interests

The right to adequate housing, including affordability, habitability and security of tenure, is recognised internationally as a human right. Embedding energy efficiency within the DHS reinforces that warmth and affordability are not optional extras. This does not conflict with business objectives.

Supporting protections reinforces a company’s commitment to responsible investment and sustainable markets. It builds resilience in portfolios and reduces exposure to reputational risk that can erode brand value and investor trust. 

A stable, scalable retrofit economy requires fairness

The UK’s ambition to retrofit millions of homes is one of the biggest housing market opportunities in decades. £15 billion in funding is at stake. Making sure that investment translates into high‑quality outcomes, not social dislocation, is a condition for long‑term success.

For business leaders, advocating for sensible limits on post‑retrofit rent increases – for example, backing the cost-neutrality principle – is a strategic choice. It strengthens the social licence for retrofit programmes, stabilises markets, supports delivery at scale, and aligns with broader commitments to economic growth, human rights and decarbonisation.

The question is not only whether such protections emerge in policy debates, but whether business steps up to shape them. Early, collaborative engagement helps ensure that outcomes are proportional, transparent, and commercially grounded.

Ultimately, a fair retrofit is not a constraint on growth. It is the foundation of a market that lasts: for tenants; for landlords, for investors; for the millions of homes the UK will upgrade in the decade ahead.

The Institute for Human Rights and Business’s UK Built Environment Just Transitions Accelerator (BEJTA) brings together businesses, civil society, and policymakers to advocate for policy reforms and advance business practices to achieve retrofit, housing, and decarbonisation goals while ensuring adequate housing rights, construction workers’ rights and mitigating exploitation.

The BEJTA UK Policy Working Group is advocating for clear guidance on “the split incentive”: specifically, how energy efficiency improvements should be reflected in rents. This would strengthen housing security in the private rented sector, while enabling landlords and businesses to calculate cost recovery for retrofit investments to accelerate much-needed decarbonisation. The guidance should clarify how energy efficiency improvements, and the resulting reductions in energy bills, are treated within the Renters’ Rights Act 2025 permitted annual “market-rate” rent increases. We propose that where retrofit improvements are delivered, a principle of “housing cost-neutrality” should apply: rents may increase, but only up to the value of tenants’ verified energy bill savings.

Want to learn more? Contact the project lead, Gordon Miller, at gordon.miller@ihrb.org