Landlords welcomed not having to spend “substantial sums of money” on energy efficiency improvements to homes after Rishi Sunak axed plans to force them to upgrade, although the move was branded “hugely disappointing” by a housing associations body.

The Prime Minister announced he would no longer require homeowners and landlords to make “expensive insulation upgrades” as he watered down a string of green policies on Wednesday.

No 10 officials said the change meant proposals to force landlords or homeowners to upgrade homes to an energy performance certificate (EPC) grade C by 2035 would not be taken forward.

While it means landlords do not have to fork out cash immediately, the move drew criticism as it could leave their renters facing costs to heat poorly insulated properties.

The National Housing Federation, which represents housing associations in England, warned that scrapping targets “could lead to people facing higher bills for years to come”.

Analysis by the Energy and Climate Intelligence Unit (ECIU) indicated the cancelling energy efficiency regulations for the private rental sector could cost households almost £8 billion in higher bills over the next decade.

ECIU energy analyst Jess Ralston said: “The PM has sided with landlords over renters, putting their energy bills and cost of living up by ducking the improvement of rules on energy efficiency.

“That doesn’t make any sense when excess cold in homes costs the NHS £1.2 billion per year and renters are amongst those with the lowest incomes.”

While industry body the National Residential Landlords Association (NRLA) praised the dropping of plans to fine landlords who fail to meet energy efficiency targets, it criticised uncertainty over Government policy as “hugely damaging to the supply of rented properties”.

Chief executive Ben Beadle said: “The NRLA wants to see all properties as energy efficient as possible.

“However, the uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of rented properties.

“Landlords are struggling to make investment decisions without a clear idea of the Government’s direction of travel.

“It is welcome that landlords will not be required to invest substantial sums of money during a cost-of-living crisis when many are themselves struggling financially.

“However, ministers need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see.

“This must include appropriate financial support and reform of the tax system which currently fails to support investment in energy efficiency measures.”

Housing market
The UK has some of the most poorly insulated homes in Europe (Dominic Lipinski/PA)

National Housing Federation chief executive Kate Henderson said: “It’s hugely disappointing to see the Government row back from its commitments to net zero, particularly on improving the energy efficiency of our homes.

“England’s homes are among the oldest and draughtiest in Europe.

“Making homes more energy efficient is a win-win, not only helping to save our planet, but also boosting our economy by creating jobs and, crucially, saving money.

“Our research found that retrofitting homes would save social housing residents on average 40% on heating bills.

“Scrapping targets on this could lead to people facing higher bills for years to come.

“Housing associations are committed to carrying out this work and ensuring residents on low incomes benefit from homes that are affordable to heat.

“It’s a commitment that will help people across the country.

“However they cannot do this alone and need leadership, policy certainty and long-term investment from government.”

Nearly 20% of Conservative MPs are landlords, while rented homes in England owned by MPs across the Commons made at least £1,670,000 in rental income in a year, research by political activist group 38 Degrees in May suggested.

Downing Street said good progress had been made on homes reaching EPC grade C or above — with 47% of houses meeting the grade, up from 14% in 2010 — without having to penalise people for missing the target.