The funding cap is an increase on the £2,500 that was previously put forward by government after HHIC proposed that the cap should be set at £5,000.

The HHIC says the government’s plan to cap spending at £2,500 would have helped just 30 per cent of houses to reach EPC band E, whereas a cap of £5,000 would lift a substantially higher number to this banding. Government predicts that a cap of £3,500 will affect 290,000 properties.

Stewart Clements, director of the HHIC, said: “When government and industry - ‘those in the know’ - work together then the resulting outcomes are better. I am pleased that the government has recognised that legislation is required in the rental sector to improve EPC ratings. The figure of £3,500 improves upon the suggested £2,500, which would have only helped 30 per cent of homes improve upon their EPC rating.”

“Having said this, HHIC still believes £5,000 is the correct level for the cap, as it would help close to 60 per cent of cold, inefficient (band F and G) homes reach the required EPC level.

“This is because the cost of installing a new central heating system can amount to £4,000, which is £500 above the new cap level. Insulation alone will not keep a home warm; you need an efficient heating system too, and gas central heating is the most obvious solution.”

“Aside from the debate on the numbers, this decision does open up a wider debate on the duties landlords have to their tenants. The amount that tenants pay for rent is often their largest outgoing, yet is one of the least regulated markets in the UK. HHIC believes that like every business and service provider, landlords should be regulated by similar laws to every other market in the UK. This would prevent cold and damp homes from entering the rental market.”