RESIDENTIAL Paul Brett Managing Director Landbay
RAISING AWARENESS OF EPC RATINGS AND GREEN MORTGAGES Landbay recently conducted a survey among buy-to-let landlords which showed that 70% are aware of government proposals for EPC changes in the rental sector. The current proposal is that all new tenancies on rental properties must have an EPC rating of A, B or C by 2025 and for existing tenancies by 2028. But the level of awareness varies depending on the type of landlord. Portfolio landlords with 10 or more properties have more knowledge of this, unsurprisingly as they are running businesses, with 80% knowing about the proposed new rules. Meanwhile, 70% of portfolio landlords with four to 10 properties were aware but only 54% of non-portfolio landlords with one to three properties knew about it.
Green mortgages The EPC status is an important element of green mortgages which have been coming into the market, with several new lenders introducing them last year. We were one of the first lenders to bring in a green range and the response from brokers and clients has been great. Around one in 10 of our new loans are now green, and they can be taken out on new build properties as well as existing ones. However, our survey revealed that only 31% of buy-to-let landlords are aware of green mortgages, with non-portfolio landlords being virtually in the dark - just 4% had heard of them. More than half (53%) of larger portfolio landlords knew about green mortgages and 23% of portfolio landlords with four to 10 properties also aware. As an industry we should try to raise awareness of green mortgages and the importance of trying to make all our homes, whether they are rented or owned, more energy efficient. Climate change is a really important issue and the government is trying to tackling it. For example, all new homes built after 2025 cannot install a gas boiler and the government wants to them to be phased out completely. It really is a massive problem with the UK having such a
MARCH 2022
large amount of older housing stock that is EPC rated D to G.
Upgrading properties Green mortgages are just a small cog in a big wheel but they can make a difference. When landlords were asked if they would consider making their properties more energy efficient for a lower interest rate, three quarters of them (74%) in our survey said yes. For those buy-to-let investors who are thinking of buying more property in the next 12 months, 36% said they will only purchase property that has an EPC rating of A, B or C. A few more landlords, 38%, are willing to buy EPC rated property of D or below and bring it up to at least a C rating. But 26% said the EPC rating will have no influence on their buying decisions. Our survey indicated that for those landlords who did intend to upgrade their properties to bring them up to at least a C rating, 26% want to do this as soon as possible. The other 74% would prefer to wait until nearer 2025. Again, there are differences between larger and smaller landlords with 80% of both portfolio (four to 10 properties) and non-portfolio buy-to-let investors not prepared to upgrade yet. But 35% of larger portfolio landlords want to start the necessary work sooner rather than later. When talking to your landlord clients, it’s a good idea to ask them if they are aware of the EPC proposals on rental properties. It’s also a great opportunity to let them know they could be eligible for a cheaper, green mortgage paying a lower interest rate if they upgrade their properties. For more information or to discuss any of your BTL cases please get in touch using our BDM finder: https://landbay.co.uk/ intermediaries/bdm
