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BTL mortgages could help landlords meet Minimum Energy Efficiency Standards

Just 4% of landlords and tenants had in April this year heard of Minimum Energy Efficiency Standards (MEES), claims research by Just Landlords – when the standards made it illegal to take on new tenants in a property with an Energy Performance Certificate rating below E.

The worry is that a fair number of landlords could soon be in for a nasty shock.

According to government figures, around 300,000 properties are still rated F or G nationwide. But from April 2020, existing tenancies in properties rated below E will become illegal too.


A fair number of buy-to-let landlords who rely on their property as their pension face the prospect of a significant fine and their main source of income being out of action, until they get their polluting properties into shape.

Some renovations needed for MEES can be covered on a no-cost basis. But landlords that sit on poor-performing properties may be left needing to make major upgrades – and having to pay for them out of their own pocket.

While tax changes and market uncertainty have taken a little lustre off the appeal of buy-to-let as a retirement solution in recent years, there is little doubt that for many it is still a great option.

There are plenty of cases of retirees who rely on their rental property not just for their day-to-day income, but also to cover ongoing care costs. For them, the prospect of losing their rental income is a complete non-starter. But equally, not all of them have the capital on hand that would be needed for extensive property improvements.

Luckily, there are options available that can help landlords to preserve this income. Buy-to-let products have recently come onto the market, allowing older landlords to unlock some of the equity in their properties tax-free, while keeping their portfolio intact.

In the year since these products came to market, we’ve seen them used for a range of purposes, from supplementing income, to covering upfront care costs, to even being used to help younger relatives onto the housing ladder.

But for over 50s relying on properties that are failing the energy test to fund their retirement, getting them into shape to ensure they don’t lose that income stream could be one promising use for them that could help secure peace of mind.

Alice Watson is head of marketing and communications at Canada Life Home Finance.

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    When there is a shortage of homes, it's crazy to ban otherwise perfectly habitable properties from being rented out to tenants willing to take them and the associated higher energy costs.

  • Colin Lillicrap

    The first step for landlords seeking peace of mind should be to have the accuracy of their current EPC rating checked. For commercial properties it can be advantageous to have the EPC rating calculated using Dynamic Simulation software usually abbreviated to DSM. In some circumstance DSM can produce ratings two bands better than those calculated using SBEM. The extra cost of using DSM to produce accurate EPC rating is more than offset by the potential savings from avoiding unnecessary improvements or fines for non-compliance.

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    • 19 February 2019 17:45 PM

    If allegedly only 4% of LL are aware of the EPC requirements that means there that most LL are complete and utter idiots.
    The EPC requirements have only been known about for about 5 years!!!
    Surely a LL would keep themselves aware of anything that might compromise their income!!??
    Achieving E status is no use as a few years later D and C status will be required.

    Many LL would be better off getting rid of these dud properties to unsuspecting homeowners.
    It would take decades to recover the costs of achieving C status.
    Simply pointless as no money will be made and of course S24 will apply to any extra BTL norrowings.
    Many LL would do well to sell to their existing tenant if possible.
    Give a little discount.
    The buyer won't know they are buying a lemon.
    Once bought if they ever wished to sell they eould be rstricted to selling to other homeowners as no LL would be stupid enough to buy a property that wasn't EPC C Status.
    Or they might buy but would need a discount of about £15000 to cover EPC C costs and the 2 months of void while works are carried out.
    LL should not be complacent even though there are exemptions that can be sought.
    If they think achieving EPC E status is it they need to think again as they are simply wrong!!
    Mind you it seems there arr so many dopey LL out there that a LL with one of these dud properties should be able to mug an ignorant fellow LL into buying it.
    This EPC requirement hasn't exactly been sprung on LL.
    Shrewd homebuyers will bargain hard with the LL if they are aware the seller is a LL.
    They will know the LL is trying to offload a dud property.
    Unless a rental property is C status it is a dud.

    To achieve this which is required in about 9 years it is reckoned the cost is about £6500 currently.
    On many low yielding properties that could take decades to recover.
    Not even factoring in the lost opportunity on that money or the voids that will occur while the works are carried out as it would be impossible to leave the tenant in situ
    LL as a matter of urgency need to review their properties to ascertain the feasibility of upgrading to EPC C status.
    Most will find they are better off selling.
    Many tenants will find themselves homeless as LL have to remove them because the property is no longer EPC compliant .BTL lenders should be extremely concerned over the ignorance of LL about the EPC status.
    This as there will be millions of properties not C status in 10 years time.
    Lenders need to start a campaign of making sure their LL borrowers are aware of the EPC issues or there will be lots of repossessed properties!!
    Of course if we leave the EU with no deal the Govt could take an executive decision and abolish the stupid EPC regulations!!!

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    Just like buy diesel, cheapest and best form of fuel. Now worst.
    Get an EPC to see what your rating is,, turn off your mobile charges when not charging, turn off lights in rooms when not using, fit solar panels, fit LED lightsput gas in when none in property, or road. Give to your tenant,,, who never reads it
    All this is forward planned by governments, suck us in and then move the goal posts. Same old tricks.

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    • 19 February 2019 19:28 PM

    This EPC thing could be a boost for homebuilders as many LL might consider selling off their dud properties and re-invest in new-build property which will be EPC C status.
    Just the SDLT surcharge is a real killer.
    Perhaps many LL will when factoring in S24 and MEES will consider drastic deleveraging; selling up or leaving the PRS completely.
    All that will potentially happen is that these dud properties will change tenure to homeowners.
    Where the former tenants will live is anyone's guess.
    Apparently Councils are now booking Serviced Accommodation as TA for those tenants being made homeless as S24 LL sell up.
    Now who would have thought this situation would occur!!?

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    Trust not tricks


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