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By Andy Homer

Chief Customer Officer, Gatehouse Bank


Why a green mortgage could be the answer to new EPC regulation

Whether it’s increasing the amount we recycle, choosing sustainable products, or reducing our carbon footprint by limiting the amount we travel, we want to be sure we are doing right by the environment and playing our part to tackle climate change. However, when it comes to cutting our carbon footprint, the biggest impact many of us can have is actually through our property.

UK homes are a leading cause of emissions, responsible for a fifth of the country’s overall annual carbon output. It’s no surprise then that the government sees improving home energy efficiency as a critical part of its net zero 2050 plan, and as owners of multiple properties, the government are already looking to landlords to take the first steps.

EPCs rising


Recently, the government put forward new proposals that will require landlords to improve the energy efficiency of properties in their portfolio. Where landlords currently are required to meet a minimum ‘E’ EPC rating, the new proposals will require at least a ‘C’ rating. The measures, if moved forward, will come into effect for new tenancies in 2025 and existing arrangements in 2028.

With such a varied stock of rental housing as we have in the UK, from large Victorian builds to Georgian cottages and 1960s-era blocks, bringing these properties up to a new EPC standard will be a significant challenge for many landlords.

The cost alone can be staggering. Fitting double glazing, for example, can be anywhere between £500 to £3,200 per window. And while they can help save on rising energy bills, the average cost of fitting solar panels is £6,500. If you’re a landlord who owns multiple rental properties, that’s a significant outlay. Yet, it could cost you even more in lost rent if your portfolio doesn’t meet the impending requirements.

However, the mortgage market is looking to help.

Think green finance

If you’re a landlord, the good news is that banks are responding to the challenge of climate change and already helping customers to make energy efficiency improvements by offering green products.

Green finance plans are becoming more mainstream and now make up 15% of the whole market, according to research by Mortgages for Business. These solutions can be a vital source of support for landlords by helping to manage some of the costs of energy efficiency improvements. So how can these products help you?

There are many different kinds of green plans, but two key options include products that give cashback to borrowers who make changes which improve their property’s efficiency, or those which offer customers a reduced rate if the building meets a certain EPC rating. For example, at Gatehouse Bank, we offer a Green Home Finance product which rewards landlord customers purchasing or refinancing an energy-efficient home. This solution offers a reduced rental rate on our two or five-year fixed rate products. In addition, as an ethical bank that is committed playing our part in ensuring a sustainable future, we’ll offset the carbon footprint of your property for as long as you have a fixed rate product with us.

Where do I turn?

Despite the array of green products available, you’ll want to know you’re picking the right option for you. You might also have questions about the impact of the new legislation and which properties in your portfolio are likely to be impacted. So, where do you turn to?

A great place for any landlord to start is to reach out to your broker or bank about the green solutions they have on offer. If you’re planning to take out a green product, you will need to ensure that you have the relevant EPC rating to meet the criteria required.

Additionally, a range of organisations are working hard to make sure government advice is accessible. Simple Energy Advice for example, explores legal obligations, the means to make home improvements, and funding opportunities for landlords, while the Centre for Sustainable Energy offers a range of helpful tips on how to meet the Minimum Energy Efficiency Standards (MEES).

Depending on where your portfolio is situated, you might also be able to access further support from your local council. Interestingly, the Bassetlaw council in Nottinghamshire has been awarded £65,000 of government cash to help landlords to comply with new EPC regulation. The green agenda is only going to grow in importance, so it will be interesting to see how other councils respond.

The government’s proposed changes to EPC requirements are clearly an important part of its plans to reduce carbon emissions and tackle climate change, but they also have the potential to create financial challenges for landlords. However, finance is available to help you, and by speaking to your broker or bank about green finance, you could save money on any changes, while making your property cleaner for the planet.

* Andy Homer is Chief Customer Officer at Gatehouse Bank *

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    Green mortgages are a good idea to a point. It's fine if the property already has the required EPC. The issue seems to be that product switch at end of current fix green products aren't readily available for existing mortgages. Also that if you improve the EPC during the term of the mortgage the rate doesn't drop down onto the green rate.

    There is a bit of a lack of consistency as to what the EPC requirements are to qualify for a green mortgage. Paragon want A, B or C for BTL whereas NatWest wants A or B for residential. A broker's lack of knowledge on that point has just added £30 a month to my son's mortgage offer as the broker applied to NatWest for a green mortgage on a property with an EPC C. By the time his mistake was noticed rates had gone up so through no fault of his own my son will have to pay an extra £1800 in interest.

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    Oh please ! So I can get a slightly better rate if I spend circa £10,000 plus (per dwelling) on my EPC D & E properties!!! Utter nonsense, I would have to live to a thousand years to get it back via my ROI.

    If it comes in then thousands of us will sell and leave. See how that helps the net zero plan, my properties are firmly in the FTB market, so when purchased they will not have to be any EPC rating, double whammy…. The EPC stays the same and a house leaves the rental stock.


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