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What to look forward to in Green Buy to let lending
There has been a lot of speculation around EPC requirements for private rental sector (PRS) properties lately.
For example, Mortgage Advice Bureau (MAB) research recently revealed that nearly half of all landlords they polled were completely unaware that future measures designed to increase all PRS properties to a minimum EPC level of C would actually become law, and not just ‘guidance’.
Indeed, only 35% knew that level C was likely to become the new minimum level to be able to let out a property, and a significant number – 18% - were not even aware of the potential changes at all.
Our own data gathered by our partners BVA-BDRC (Q4, 2022) puts the figure at 9% of landlords not aware of the new regulations at all, but 66% fully clued up and ready, and 25% aware but not understanding the details.
In recent months, when asked about how they might fund any work required to improve the EPC, many landlords have suggested they will rely upon savings, but many will be looking to use their properties as a mechanism to fund any works, particularly if they need to be fairly substantial.
There are clearly some other benefits for landlord borrowers to access in terms of getting the EPC to a level C sooner rather than later. The growth in ‘Green’ mortgages – as offered by Foundation amongst other lenders - which offer better rates on those properties already at C, seems unlikely to stop anytime soon.
At the moment, advisers with landlords coming up to remortgage should be having an EPC discussion with them. Interestingly, the MAB research showed that a vast majority of landlords know exactly what their property’s EPC is (86%), however other research from Knight Frank suggested the average amount to upgrade a property would be £9,260 – are landlords willing to dip into savings to fund this, and if not, then it makes sense to use mortgage finance to do so.
You can read our article here on how to see the EPC of a property and gain a forecast on what it may cost to upgrade it to standard.
As mentioned, we’ll continue to offer Green products across our borrower Tiers, plus on HMOs/MUBs/Short-term lets because we’re aware this is an issue that affects all borrowers and all properties.
*This article was originally published on Financial Reporter
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