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Published on : November 8, 2021 15:09

How could the ‘green’ status of your property affect your BTL mortgage?

With energy efficiency and the climate frequenting the headlines, is it time to look at the green credential of your rental property?

The emphasis on tackling climate change by world leaders is currently a major subject. It is easy to associate reducing the reliance on fossil fuels, and additions of towering wind turbines as methods of boosting ‘green’ credentials.

There are, however, ongoing plans and proposals by the government to tackle environmental issues using the housing sector.

Since April 2018, landlords have had to ensure the minimum EPC (Energy Performance Certificate) rating of their property is an ‘E’ to let to tenants.

From April 2020, this legislative change was adapted to cover existing tenancies. This means that all rented properties require an ‘E’ rating, even if the tenants in situ arrived before April 2018.

The proposed plans by the government mean that by 2025, homes will require a minimum EPC rating of ‘C’ for new tenancies. By 2028, this will be rolled out to all tenancies and rental properties regardless of the tenancy start date.

These plans, therefore, pose a new target for mortgage lenders; to ensure that the properties they cover have a minimum EPC rating of ‘C’ by 2030. This poses new difficulties in getting a mortgage for your buy-to-let portfolio as a landlord, particularly with any prospective future investment properties.

It could also mean that properties that are not above the ‘C’ target could be subjected to much higher mortgage rates.

The proposals, however, do mean that banks and lenders are rapidly looking into green home mortgage products already. Paragon Bank is one of the first lenders to relaunch its buy-to-let mortgage range to include several green products.

It is therefore looking more likely that a wider range of mortgage lenders will begin to offer green service products to landlords in the coming years.

How can landlords increase the energy efficiency of their rental properties?

There are a number of strategies that landlords can take in order to maximise the energy efficiency of a rental property. Cost is a large factor as some of the following methods are far more inexpensive than others. On the other hand, the costlier the amendment, the higher the energy rating can be positioned.

  1. LED Lighting

    A popular and relatively cost-efficient method of contributing to an energy-efficient home is swapping to LED lighting throughout a property.

    LED lights have in homes have grown in popularity due to their efficiency and long-term energy bill saving costs. They are an ideal quick and budget-friendly method of improving an EPC rating.

  2. Insulation

    Another popular and effective method of driving the energy rating of a property is by installing insulation. Installing insulation in a non-insulated property makes all the difference, as well as replacing old or damaged insulation.  Increasing insulation in the loft to at least noticeable impact on how much energy escapes through the roof.  An uninsulated roof can lose up to 33% of heat.

    Wall insulation is also effective, however, can be far more costly. Solid walls insulation, both internally and externally, has a greater benefit on saving energy bills. The costs however can spiral into the thousands, as opposed to the hundreds to insulate a roof or a cavity wall.

  3. Windows & Doors

    Double or triple glazed doors and windows are one of the most sought after methods of driving energy efficiency. Not only can they be perceived to improve the visual of an older property, thus driving kerb appeal when marketing a property, but also make significant steps in reducing drafts around the frames.

    New double glazing could help to boost your property’s EPC score by five to ten points, but will typically set you back a four-figure sum to complete your entire property.

  4. Energy-efficient boilers

    One of the fundamental components to raising the energy efficiency of a property is the heating source, typically the boiler. Depending on the age of the existing boiler, switching to a newer, condensing model can significantly improve the EPC rating.

    Whilst a costly figure, likely to be in the four figures, an energy-efficient boiler has the potential to increase an EPC score by as many as 40 points.

It is plain to see that the plans to tackle climate change, and to drive a green revolution within the rental sector, will have more impact on legislation and the financial components of letting out a property. As a landlord, it always pays and is beneficial to be ahead of the changes and new legislation brought into the sector.

If you would like any advice on increasing the EPC rating of your rental property, or staying ahead of any green-based legislation changes in the rental sector, our dedicated property management and lettings team would be more than happy to assist; simply give us a call on 0161 443, 4777.

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