Green Talk | Landlords Face Potential Losses by Misdirection

A broker has raised concerns about landlords investing substantial amounts in eco-friendly renovations, relying on outdated Energy Performance Certificate (EPC) ratings (Green Talk). Despite these significant expenses, the property often does not officially improve after renovations.

Financial Risks for Landlords

This issue poses financial risks for landlords and underscores the importance of staying informed about current EPC standards and regulations. Property owners must ensure that their investments in green refurbishments align with the latest certification requirements to maximise the long-term benefits and value of their real estate assets.

In a video series with Accord Mortgages, LDNFinance’s chief operating officer, Greg Cunnington, highlighted a common concern. Landlord clients in the Southeast hold property assets mostly rated D to E.

Furthermore, there’s a growing number of stories about past EPC reports. These reports have led to significant expenses, ranging from £20,000 to £30,000 on renovations. However, the legislative landscape remains challenging, often resulting in unchanged ratings despite major investments.

Cunnington stressed that landlords need to do thorough research. They should gather comprehensive information and understand the required measures. This approach is essential to elevate their EPC ratings to the favourable A to C range.

Importance of Research and Resources

Adding to the discussion, Liz Syms, proprietor of Connect Mortgages and Connect for Intermediaries, highlighted available tools for landlords. Recent EPC assessments provide specific upgrade recommendations. Older assessments may require a new evaluation via the government website for updated instructions.

Syms emphasised the importance of brokers and clients being well-informed about the process. Education on the complexities of improving EPC ratings is crucial. As regulations change, keeping up with the latest guidelines is vital for informed decision-making.

The Role of Lenders

Greg Cunnington, chief operating officer at LDNFinance

Cunnington emphasised, “Our firm is ready to provide valuable assistance. When engaging landlords, we have a wealth of information. We also connect with third parties, trade bodies, and skilled tradespeople. This positions us as a crucial resource. This presents a significant opportunity and underscores our fundamental purpose – to offer informed counsel.”

Syms highlighted the advisory risks for networks and intermediaries. He cautioned about the intricacies within. “The devil is in the details,” he said. Presently, much remains uncertain about the exceptions concerning affordability and properties. There is a risk of rushing to the educational aspect. Individuals might invest heavily without achieving the desired outcomes.”

Regarding capital raising, Syms questioned the awareness of available choices, such as further advances and second charges. Additionally, she stressed the importance of advisers being well-versed in these options. This is crucial since a substantial portion of the buy-to-let market is locked into five-year fixes extending beyond 2025.

Risks for Brokers and Advisers

Moreover, Syms pointed out the potential dilemma if a lender does not offer further advances. Customers may face issues if lenders do not allow second charges either. Consequently, they could incur early repayment charges when seeking to raise capital.

Jeremy Duncombe, Managing Director at Accord

Jeremy Duncombe, managing director at Accord, outlined challenges for the 2025 deadline for an A-C rating on new tenancies. He highlighted the difficulty of implementing changes and securing tradespeople for necessary work. Improving properties, such as Victorian terraces, to achieve a C-rating also poses significant challenges.

Duncombe emphasised the crucial role of lenders in refinancing opportunities, including capital raising and debt consolidation. Surprisingly, he noted a lack of awareness among brokers about the looming deadlines at recent Buy to Let Market Forum events. This underscores the importance of initiating conversations with landlords to address these critical issues effectively.

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