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Three ways you can help your landlord clients finance green improvements
From 2025, under the current proposals all newly rented properties will be required to have an EPC rating of C or above. Currently, properties only require an EPC rating of ‘E’ or above for us to lend at Foundation Home Loans. Existing tenancies will have until 2028 to comply with the new rule changes.
Over the next few years, many landlords will want to remortgage to capital raise to improve their EPC rating on their portfolio.
Capital raising to make green upgrades
At Foundation Home Loans, we allow capital raising on buy to let properties for most reasons except for repaying tax or gambling debt. A full list is on our criteria guide.
All lenders have their own rental (ICR) calculations, and here at Foundation, our ICR calculation on a five-year fix is calculated at pay rate, and stress tested at only 125% of limited companies and basic rate tax payers, and 145% for other landlords; allowing them to capital raise against their rental income up to 75% LTV. Those levels apply even for specialist properties like HMOs. You can try the BTL max loan calculator here.
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The Foundation Home Loans BTL range also includes a 5-year fixed rate product that only has Early Repayment Charges for three years. This offers the customer the benefit of being able to maximise their borrowing on a rate that’s fixed for five years, whilst still having the flexibility to remortgage away after 3 years without ERCs to pay.
Existing borrowers increasing their loans at Foundation
Please note that Foundation Home Loans do not offer further advances, but if the customer wanted to remortgage their existing Foundation Home Loans mortgage back to us, they could do so. The borrowers would be liable for all costs involved, however, we have several products which are fee assisted or come with a free valuation.
Day one remortgaging after green improvements
Not only that, but we also have our Green mortgage range available for landlords who currently have an EPC rating of a C or above. Because these products allow for remortgaging from day 1, this product is particularly helpful for those landlords who brought a property using bridging finance and wants to remortgage within 6 months of ownership after improving the EPC rating up to a C or above. These Green products also come with a free valuation and are also available for purchases (including new build properties).
More on our Green Mortgages range here
You can check the EPC of a property in England and Wales here: https://www.gov.uk/find-energy-certificate and in Scotland here: https://www.scottishepcregister.org.uk/
Please have these EPC changes in the forefront of your mind when discussing BTL product choices with your customers over the next few years.
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