The government is to beef up legislation forcing landlords to pay a fine if they rent properties without proper insulation.

The new strictures on the quality of homes are included in the "green deal" which the government will announce today and put before parliament in December.

By the autumn of 2012, the government says the scheme will enable homeowners to make their house or flat energy-efficient with no immediate payments.

Companies would install loft and cavity-wall insulation draught-proof doors and windows and the homeowner would pay the firm back through their energy bills over up to 20 years. The aim would be for the homeowner to barely notice the repayments due to lower energy bills.

Ministers believe that about 14m of Britain's 27m homes, offices and buildings could be fitted with energy-saving measures in the next 10 years and that jobs in the energy efficiency refurbishment sector could rise from its current 27,000 to 100,000.

The government has faced criticism in recent weeks for having few clear incentives for people to take the schemes up but large high street names including B&Q have confirmed they will market and sell the home-energy packages to the public, with Marks & Spencers also in talks with ministers.

The government wants to ensure it is not only high-end properties that go through the scheme, and to make sure those rented out by private landlords are also upgraded – in the words of one official, targeting the "Rupert Rigsbys", the landlord in the 70s TV show Rising Damp who managed run-down bedsits.

In the 2008 English House Condition survey – the last year for which figures are available – 21% or 676,000 homes out of the total 3.2m dwellings in the private rented sector were among the worst performing properties, many being F- and G-rated, the lowest bands of energy efficiency possible. According to the data, 68% of cavity walls were uninsulated and 45% of lofts had either less than 100mm of insulation or none at all.

Recent attempts to encourage private landlords to improve their housing stock have been unsuccessful. In the first two years of the carbon emissions reduction target scheme, only 1.9% of loft insulation installations were in the private rental sector compared to 91% in the owner-occupier sector.

The government will press councils to use existing legislation more actively, under which they are able to compel a landlord to carry out the work or do the work themselves and charge the landlord. They can also impose a fine of £5,000.

The forthcoming legislation would mean that by 2015, any tenant who asks for energy efficiency improvements cannot be reasonably refused by landlords. Local authorities could have the power to insist landlords improve the worst-performing properties.

The government insists there will be no "upfront or net negative" costs to landlords, and so hopes that they will see no reason not to take up the offer, and instead will see their property increase in value once it is upgraded.