The importance of EPC levels

Tracking a path through 2023 and determining what might be the major issues we have to confront over the next 12 months, is not always easy, but it seems a relatively safe bet that the whole ‘Green’ issue is going to play a much bigger role in the mortgage and housing markets.

We’ve steadily seen the massive impact climate change is having on our planet and what could happen if we ignore the warning of credible experts.

Within the mortgage market, last year felt like a turning point in terms of providing an array of ‘Green’-focused products, and at Foundation we have products for both owner-occupiers and landlords purchasing/remortgaging properties with an EPC rating of C and above, incentivising those who have properties below this, to move their ratings to benefit from these price cuts.

There are a huge number of properties below this level and a considerable amount of work will be required to improve this. At the moment, one wonders whether there is enough credence given to the EPC level of a property, in order to have an impact on its value.

Research from Mortgage Advice Bureau found that below one-fifth of the population (19%) said they would not consider a property if it was below level C.

The research revealed that 60% don’t know what their EPC level was, but it’s also clear that these issues are now much more of a focus for both owners and potential purchasers, and that might shift the market in the future in terms of values.

Currently, surveyors/valuers tend to say that EPC ratings and the general energy efficiency of a property are not having a discernible impact on values, however, this won’t always be the case, especially if we are moving into a world where the cost of energy continues to run at these inflated levels.

Both owner-occupier and landlord purchasers are much more discerning about the emission output of the homes they are interested in buying, their energy efficiencies, etc, especially when we have mandatory, minimum levels introduced for EPC ratings.

Owners may find they have to settle for offers below other similar local properties in their area based on a lower EPC rating, given that any new owner will need to have work carried out at some point to meet these new guidelines, or for example, if they want to let it out to new tenants.

From an advice perspective, there is a growing need to discuss this with clients, in order to ascertain EPC levels, because this might make them eligible for the incentivised products that do exist.

Overall, we as lenders are aware of a growing need for products based on an understanding of what will be required from future Government action in this area. This is likely to be a much more visible part of our mortgage market in the and specialist lenders like ourselves are likely to be leading the process to support advisers and their clients in this area.

References:

https://www.yourmoney.com/mortgages/two-thirds-of-homeowners-unaware-of-their-epc-rating/

*This article was originally published on Mortgage Solutions 

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