Graphic of an Energy Performance Certificate efficiency rating table

Categories: epc | buy to let mortgages | second charge

Mortgage energy efficiency discounts could provide the help to landlords incurring costs to achieve energy performance certificate (EPC) ratings of C or better.

Over 40% of landlords would like to see discounts for properties that have better EPC ratings. The government’s new EPC regulations for buy to let properties states that each property must have an EPC rating of C or above in order to be rented to any new tenants by 2025, and extended to all tenancies by 2030.

Current EPC ratings across the sector

Almost a quarter of landlords have stated that one or more of their properties have an EPC rating of D or lower, whilst another quarter are not sure what their current property rating is. There is a growing concern that a large number of properties will not pass government regulations when they come into force.

Landlords have already begun addressing this issue, by implementing improvements to their properties, according to a recent report published by buy to let mortgage lender, Shawbrook Bank. The results show that landlords have invested via the following methods:

  • Cash savings
  • Credit cards
  • Personal loans
  • Equity release
  • Second charge mortgages
  • Bridging loans

Almost 60% of landlords would consider choosing a green buy to let mortgage if there was a discount, and around 30% of landlords would like lenders to assist them with improving their rating, by developing an action plan or offering bridging finance to fund the work.

Cooperation is key

According to the Managing Director of real estate at Shawbrook Bank, Emma Cox, change is necessary. She states:

“Whether the government proposals around EPC ratings come into fruition this year or not, landlords will need to ensure they protect their income and ensure their properties are legally ‘lettable’ as this issue isn’t going to simply disappear. In order to ensure a healthier and more sustainable rental property market that works for landlords, tenants, communities and the environment, change is needed now."

Emma Cox argues that cooperation is the main factor to ensure all of stakeholders will be able to overcome any difficulties that may arise:

“Importantly, however, landlords are not alone in this. Lenders, including Shawbrook, have been thinking about how to help them improve their properties, with a flurry of new propositions being launched this year.

“It’s vital that we are not just rewarding those landlords with property’s rated C or above, but that we, as an industry, are supporting those who need to make improvements. Earlier this year, we hosted a roundtable bringing together industry experts, including lenders, brokers, landlords, and surveyors, to discuss how the sector can support landlords. We are continuing to use the findings of this work to help shape future products and services, and plan to roll out further support for landlords soon.”

Potential discount schemes?

Shawbrook Bank has started offering energy efficiency discounts for new buy to let mortgage customers, with future plans to provide further support for landlords that need to make improvements to their properties.

Shawbrook are not alone in offering ‘green’ buy to let mortgages. Many other lenders offer lower rate where properties have an EPC rating of A-C.

If you are approaching your buy to let mortgage renewal date, speak to our advisors today to discuss the range of opportunities available to you. Mortgage offers can be secured 3-6 months before the actual renewal date of your mortgage, as they carry expiry dates of this length.