Landlords who’ve improved the energy efficiency of their properties could be paying more for their mortgages than they need to, due to failing to take advantage of preferential green mortgage rates.
Almost six in 10 (57%) landlords who’ve made green home improvements to their properties said they haven’t commissioned new Energy Performance Certificate assessments after the work is completed to see if their energy rating has improved, according to research by Paragon Bank.
Energy Performance Certificate ratings range from A to G, with A being the most energy efficient, and G the least. Several lenders reward homeowners whose properties have the highest ratings with lower mortgage rates, so it’s vital for landlords to reassess their properties following any energy-focused upgrades to see if they could qualify for lower pricing.
The bank interviewed 500 landlords and found that over a quarter of those (28%) who did have their properties reassessed after making them more energy efficient had improved their EPC rating, potentially making them eligible for lower green mortgage rates.
Landlords’ properties should currently meet a minimum EPC rate of E, but the government is proposing that from 2030, rental properties must have a minimum rating of C or above.
Some lenders, including Paragon, are pushing for this deadline to be delayed or phased in gradually, to give landlords more time to make the changes they need.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “This research aligns with Government data highlighting how millions of properties will need to be upgraded to meet the proposed new minimum energy efficiency standards.
“As a result, we believe the 2030 target for all rental properties is unrealistic and could exacerbate the undersupply of homes for tenants. We’ve responded to the Improving the energy performance of privately rented homes consultation, calling on Government to abandon its 2030 target and instead adopt a phased implementation between 2030 and 2035.”
If you’re considering a green buy to let mortgage, make sure you crunch the numbers carefully first, or ask a broker to do the maths for you, as green deals won’t always be cheaper than comparable standard buy to let mortgages.
