Green mortgage discounts could be a key tool in helping landlords make the energy efficiency upgrades necessary to achieve an EPC rating of C or above, according to new research from Shawbrook.
Four in 10 landlords would like to see the lending industry introduce mortgage discounts for properties with better EPC ratings. Under current government proposals, buy to let properties will need to have an EPC rating of C or above in order to be rented out to new tenants by 2025. This is expected to be extended to all tenancies by 2030.
However, while a number of lenders have introduced ‘green’ propositions over the last year, more than a quarter of landlords said they were unaware that they could access ‘green’ mortgage discounts. Indeed, just 18 per cent of landlords are currently making use of them.
Shawbrook says landlords are now starting to make energy efficiency improvements. However, the costs to do so can be steep depending on the work needed.
Most landlords who have already made energy efficiency improvements have used cash savings (57 per cent), some 30 per cent have put the work on their credit cards, and 24 per cent have taken out a personal loan to fund the work. Landlords have also utilised other finance products, including equity release (16 per cent), a second charge mortgage (14 per cent), or a bridging loan (12 per cent).
More than half of landlords said they would consider a ‘green’ mortgage discount in the future. In addition to discounts, some landlords would like to see lenders to help them with an action plan to improve their rating or bridging finance to help improve ratings.
Emma Cox, managing director of real estate at Shawbrook, says: “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.
“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.”
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Green mortgages are OK to a point. Nice to get a better rate if your property happens to qualify but frustrating if it doesn't. The difference is often very, very small. Certainly not enough to fund much energy improvement work.
If lenders were serious about encouraging energy efficiency measures the difference would be greater and there would be the facility to drop down onto the cheaper rate mid term as soon as an improved EPC was produced.
If the government wanted to encourage landlords to make green improvements all such work would be tax deductible immediately and not classed as a capital improvement.
Anything the government are linked to is to be avoided, this constant “ green” pushing is so obvious, most landlords with D and E properties who are coming up to retirement will just sell, most of my friends who are landlords and are the same age as me have stated the same, we just don’t need the constant hassle and never ending cash extraction. Goodbye PRS 😂
So what happens in 2030 when they inevitably move the goalposts and nothing quite literally NOTHING will achieve a decent epc
Obvious really ...
Many landlords are the older generation that spent their whole life working scrimping & saving to get what they have.
Contributing billions to the economy in so many way for decades, billions more in taxes every year, billions more in inheritance tax for the one’s that passed on rip, just waiting for rest of us to snuf it. The younger generation many probably in negative equity anyway. We house millions of people with our own finance off our own back, only to be Criminalised, abused, fined, penalised, legislated out of existence with a White Paper for good measure by a Conservative Government that was supposed to be all for promoting small Business. While continuously attacking Private landlords by every means possible to favour the big Companies and get us out of the way. Good job Boris is out of the running he presided over everything that was forced to go wrong with the PRS. Labour couldn’t have got away with half what he done pretending to be in favour of small business and all us voted for them thinking we were on side. He should have stayed in Dominican Republic messing up the vote, he’s a messer.
On an epc I had done last week one item showed a saving of £26 pounds per year for a £3500 to £6000 pound investment. That doesn’t make me want to rush to do it!
Same here, although twice the investment and major disruption required. All for a 100-year pay-off. Which isn't a pay off.
😂😂💰💰
They keep printing these articles saying EPC'S will have to have a C rating by 2025?
This has not been confirmed and EPC assessors I know think this will not happen, we have had over 35 EPC'S done and the system leaves a lot to be desired until they can accurately assess properties, not just tick boxes, I am not against EPC but the way it has been dealt with is shambolic.
If I can't recoup costs over 5 years of increasing rents then I won't do it.
There should be an exemption for over long payback.
It’s my understand that its EPC “C” by 2025 for new Tenants and 2028 for existing Tenants .
That was my understanding Michael, but now I'm being told and reading differently , until I know for sure I'm doing nothing
Those were the original timescales, Michael, but then the legislation was originally due to be signed off in Oct 2021 and we're still waiting.
This just makes me more determined to pay the debt off and stick my middle up at lenders jumping on the pointless Green bandwagon. GO MYTHER CHINA ABOUT IT. The UKs 1% of emissions will make zero difference. It's clearly a hidden agenda. I used to laugh at people conspiring "they want us out" but after spending a year learning economics I 100% know what the BOE and it's ponzy scheme are up to.
Very frightening times ahead. Everyone please stress test your portfolio (I'd say up to 8 or 9%. It won't go higher like the 70s because that'swhen houses were onky 1 or 2 years wage), sell a property if you have to free up funds. The rates will have to pivot eventually when the inevitable job losses come. We can beat this 💪
Gosh!
We're in the presence of greatness! It only took you a year to learn economics?
The best economists actually believe they'll never master it fully, just like the best in any field focus on continually improving their knowledge by continuous professional development (cpd) and on the job experience over decades.
Green mortgages are often 0.0X% cheaper than the non-free equivalents. It's hardly worth the lenders' bother.
Certainly hardly worth the Landlords bother.
No risk for lenders they a thick fat as always, no re-possession or S.21 problems for them, I wonder why it’s not even their property .
The great reset.! Myth or reality. Conspiracy theory or not? Watch things unfold
Elizabeth, lots of things are conspiracies. That's how world wars are started. I don't believe that our German Royal family have any real connection to Britain!
I know Edwin. But always keep and open mind 😜
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