Decent Homes 2: raising the bar but at what cost?

Having previously worked for a housing association, I was a member of the National Housing Federation’s Quality of Existing Homes Group, which influences and contributes to Government thinking and consultations.  Nobody across either the social housing or private rented (PRS) sectors would dispute the ambition to create high quality, sustainable rented housing in England.  The requirement for basic standards of decency should be non-negotiable, encompassing safety, damp and mould, thermal comfort and overall condition.  The implementation of Awaab’s Law in October 2025 was an important start for the social housing sector, with government plans to extend this into the PRS, alongside Decent Homes 2 and the requirement for all rental properties to reach EPC C by 2030.  The scale of the challenge is significant: in the social housing sector alone, around 820,000 homes currently fall below EPC C.

The statistics focus the mind: based on the most recent data from the English Housing Survey (2024–2025), approximately 4.0 million homes in England currently fail to meet the existing Decent Homes Standard, across both the private rented and housing association sectors.  And this is before Decent Homes 2 is implemented, when the expectations on disrepair, damp and thermal performance tighten.  Inevitably, even more properties are likely to fail once the new standard is applied.

For both sides of the rental sector, this translates into new capital liabilities.  Many properties will require whole home upgrades which could include heating systems, ventilation, electrics, fire safety, as well as fabric repairs.   With ever increasing material costs, this could easily reach £40k per property before you start adding in the cost of new kitchens, bathrooms and so on.  The government did not include the full range of proposed additions to the Decent Homes Standard, so the overall cost pressures are slightly reduced. So, while the objective is clear, the critical issue for landlords is viability.

Everything is increasing in cost, most notably materials and labour, but when faced with a timeframe in which to make repairs and upgrades, including on void properties, the impact on landlords is immense. The social housing sector has regulated income, meaning capped rent, so housing boards have to prioritise between safety works, decency upgrades, maintaining high service levels or building new homes. Although a welcome shift now allows greater discretion to take a case-by-case approach based on tenant need, the financial reality is that development pipelines are slowing and some housing stock is being disposed of — at a time when demand has never been higher.

Similarly, in the PRS, alongside Decent Homes maintenance, landlords are faced with rising interest rates on their finance, reduced tax relief and increased compliance costs.  In many cases – particularly at the lower end of the market – the asset’s value is diminished to the extent that the landlord’s only realistic option is to exit.  Yet the availability of affordable rental property has reduced greatly in recent years, creating additional pressure on the already squeezed social housing sector.

Perhaps the greatest uncertainty lies in proposed energy requirements. The new Home Energy Model (HEM), currently under consultation, introduces a second metric suggesting that by 2039 all homes must have either photovoltaic panels or clean heating. Combined with Minimum Energy Efficiency Standards (MEES) proposals to reduce gas heating by the same date, this creates major cost, capacity and infrastructure challenges. Questions remain about whether supply chains can deliver at scale and whether the National Grid will be fit for purpose.

The Government is allowing a generous timeline – the mid 2030s – for landlords to implement the majority of necessary upgrades, which eases the social housing sector’s viability issue somewhat, allowing them time to refinance, source local suppliers and carry out this important remediation.  But material costs, supply chain issues and skilled labour shortages will not disappear and, when combined with enforcement and consumer standards regulation such as those proposed under HEM and MEES, will require costly action long before the Decent Homes 2 deadline.

Landlords would do well to consider an external audit – effectively a quality check – to provide assurance that what they have in place is fit for purpose.  Not only will this give a professional overview and, alongside it, an improvement plan, it is worth noting that the Regulator takes a positive view of external audit, a trusted form of managing risk.  Ultimately this process will allow landlords to make the right decisions for the stock that they’ve got, rather than adopting a costly ‘blanket’ approach.

Decent Homes 2 is laudable and necessary, raising the bar significantly.  But delivery?  That is a huge challenge which will likely result in reduced supply and a growing pressure on temporary accommodation and homelessness services.