Building on the earlier publication about Top-slicing and Let-to-Buy | Exploring Untapped Opportunities for Lenders | Mortgage Solutions, which delved into unexplored opportunities for lenders featured in Mortgage Solutions, we present another episode to pique your interest, “Green Talk!”
A broker has raised concerns about landlords investing substantial amounts in eco-friendly renovations, relying on outdated Energy Performance Certificate (EPC) ratings (Green Talk).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, there is often no official improvement to the property once the renovations are finished.
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.
Accord Mortgages has sponsored this video.
In a collaborative video series with Accord Mortgages, Greg Cunnington, LDNFinance’s chief operating officer, highlighted a prevalent concern among their landlord clientele, predominantly holding property assets in the Southeast, many of which fall within the D to E rating spectrum.
Notably, there’s a growing trend of stories surrounding EPC reports conducted in the past, leading to substantial expenditures ranging from £20,000 to £30,000 on renovations. The challenging legislative landscape exacerbates the situation, resulting in similar ratings despite substantial investments.
Cunnington emphasised that landlords must conduct thorough research, gather comprehensive information, and clearly understand the measures required to elevate their EPC ratings to the more favourable A to C range.
Adding to the discussion, Liz Syms, the proprietor of Connect Mortgages and Connect for Intermediaries, pointed out the availability of tools to aid landlords in this endeavour. Recent EPC assessments offer specific recommendations for upgrades, whereas those conducted a couple of years ago might necessitate obtaining a current assessment through the government website for updated instructions.
Syms underscored the need for both brokers and clients to be well-informed about the process, advocating for education on navigating the complexities of improving EPC ratings. As the regulatory landscape evolves, staying abreast of the latest guidelines becomes crucial for making informed decisions.
Cunnington emphasised, “Our firm is poised to provide valuable assistance. When engaging landlords, having a wealth of information at our fingertips and establishing connections to third parties, trade bodies, and skilled tradespeople positions us as a crucial resource. This presents a significant opportunity, underscoring our fundamental purpose – to offer informed counsel.”
Syms highlighted the advisory risks for networks and intermediaries, cautioning about the intricacies that lie within. “The devil is in the details. Presently, much remains uncertain about the exceptions concerning affordability and properties. There’s a peril in hastening the educational aspect, with individuals potentially investing heavily without achieving the desired outcomes.”
Regarding capital raising, Syms questioned the awareness of available choices, such as further advances and second charges. She stressed the importance of advisers being well-versed in these options, especially considering that a substantial portion of the buy-to-let market is locked into five-year fixes extending beyond 2025. Syms pointed out the potential dilemma if a lender does not offer further advances or allow second charges, leading customers to incur early repayment charges when seeking capital raise.
Jeremy Duncombe, the managing director at Accord, outlined additional challenges to meeting the 2025 deadline for an A-C rating on all new tenancies. He noted the difficulty in implementing necessary changes, getting tradespeople for the required work, and improving properties like Victorian terraces to achieve a C-rating.
Duncombe emphasised lenders’ significant role in refinancing opportunities, including capital raising and debt consolidation. Surprisingly, he observed a lack of awareness among brokers about the looming deadlines during recent Buy to Let Market Forum events, underscoring the importance of initiating conversations with landlords to address these critical issues.
Credits to Mortgage Solutions: “Green Talk | Landlords Face Potential Losses by Misdirecting Green Investments Due to Outdated EPC.” Until next time, stay Connected!