@LazRaz
It's a difficult question with no easy answers, not least because the current EPC assessment process is deeply flawed, and the question of whether it is better to knock down and rebuild or to keep buggering on in an unheatable home has so many variables - the materials used in the new build, expected lifespan and so on will all affect the carbon footprint of the new build and therefore whether or not the CO2 savings outweigh the build, while the cost-benefit calculation is a whole different matter. I don't think there's a single right answer.
But if you read what isn't in the Heat and Buildings Strategy, what the politicians haven't trumpeted, and what has yet to be decided - especially the role of the banks - then you'll see a fairly clear path to a situation where homes which do not meet energy efficiency standards because of heating, insulation or both will not be securable against a mortgage.
And, in many cases, if this is a result of technical difficulties, that will probably render the property worthless or close to. Sure, a cash buyer might want to buy it and live in cave-like conditions (or, more likely, rent it out), but there have long been proposals to outlaw residential lets on properties with low EPC ratings and they'll struggle to sell it on and so forth.
If a home cannot be upgraded or it would not be cost-effective to do so, and it becomes worthless, then an owner is left with several choices. Knocking it down and rebuilding is one of the more palatable ones.