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Energy Efficiency - Funding Options for Retro-fitting Properties

In the drive for the UK to be net zero by 2050, residential landlords are facing costly green refurbishments.  

Already, landlords are required to provide Energy Performance Certificates with a minimum rating of E for all of their residential properties.  However, with the government insisting that all rental properties have an EPC rating of C and above by 2025, moving to B by 2030, the pressure is on for landlords. 

EPCs are useful in identifying the energy efficiency improvements that can be made to boost a property’s rating, including such measures as laying wall insulation and installing smart technologies.  However, tenants looking to live a more sustainable life want more - rental properties with electric vehicle charging points, energy efficient appliances and water saving gadgets.  


Although the intentions of the government are well-meaning, there is very little financial support to help landlords to fund these green updates.  For example, the average cost of installing an EV charging point at a residential property is £1,000, up to £350 of which can be claimed as a grant from the government’s Electric Vehicle Homecharge Scheme.  

But when it comes to major work such as wall and floor insulation, then the costs can spiral into tens of £1,000s per property.  

Given that residential landlords are legally obliged to bring their properties up to date in line with EPC rating targets, they have very little choice but to find the money or sell up. A survey from The Mortgage Works found that 52% of impacted landlords have thought about selling some or all of their properties because they don’t think they’ll be able to either complete or finance the works needed to get their properties up to the required standard.

Luckily, there are options available.

Remortgaging to release equity or secure a lower rate

If you’re a landlord with a portfolio of properties which are mortgage-free, you can remortgage to release equity from one or more of your properties.  This can be used to pay for home improvements to your residential properties. 

If you have an existing mortgage on one or more of your properties and it is coming up for renewal, or you’re on a mortgage rate that isn’t as competitive as it could be, you could remortgage onto another product with a cheaper rate, the saving you money on your monthly repayments and freeing up funds.   

Often property is your biggest asset so using it as collateral to secure extra funding through remortgaging can make sense.  Private banks and building societies are more likely to offer their most favourable rates and terms if you have a property to secure your loan against. 

Lenders will want to know that you can service your monthly repayments and it’s important to be realistic about the valuation of your properties – some estate agents may give you a higher valuation than your mortgage lender.  In addition, if your current mortgage is coming up for renewal, make sure you shop around for a new deal and don’t fall into the trap of moving onto your existing lender’s standard variable rate which undoubtably will be more expensive and could cost you money.

Incentives for property development 

Many lenders are providing incentives for property owners who develop new build, part-builds and comprehensive renovations to an A / B EPC standard.  

If you’re a landlord with properties that need a good deal of work, then it might be worth looking at borrowing a large cash injection, either through a new mortgage or remortgage, for extensive work to bring your properties up to an A / B standard. It might be more cost effective in the long run to do this, rather than spend money in the interim to reach a C standard for you then to have to borrow more money at a later date to reach the government target of an A / B.

Some lenders, such as Paragon Bank, have a range of loans specially designed to provide landlords with additional funding to retrofit their properties and further incentives with favourable buy to let mortgages for those who own properties which hold an A – C EPC rating.   

Others, such as Lloyds Bank, have programmes such as the Lloyds Clean Growth Finance Initiative which provides discounted arrangement fees and lending rates for green investment and capital expenditure.   All lending is dependant on whether you meet the lending eligibility criteria.

When looking at securing any type of lending, please speak to a specialist broker first who can negotiate the right terms and rates to suit your individual circumstances, and will also be able to help you work out whether the investment is financially beneficial in the long-term.

* Charles Ayton is senior commercial manager at largemortgageloans.com *

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    This isn't law yet, still being talked about, so I'm waiting to see what really happens, the can could likely be kicked down the road, there will also be exemptions as there were when EPCs were increased to 'E' I have one property 'F' with an exemption, there could also be changes to how EPCs are assessed, there could be grants come available , a lot can change yet, I think it would be foolish to be spending money on any upgrades at the present time


    Out of interest, what was necessary to get your exemption cert, please?


    Luke, not a lot really, I got Aran Services to do a MEES report for me quoting £14k to bring the property unto an E and forwarded this off to a link that they supplied and hey ho I got the exemption, whether it'll work again in 2028 I don't know, but I have a happy tenant and his friend paying a bargain rent of £468 a month for a 3 bed house, they are happy and so am I , I paid £13,500 and spent around £7.000 renovating it in 1995, it's been successfully rented ever since, so you can see that it's paid for it's self many times over, at a guess in auction today it would likely make £90 - £100,000 , so we'll see what happens in 2028, I expect the same tenant will be there, but I won't be spending lots of money on it


    Ah, okay. As I understand, the new expected rules will require the requisite amount (£6.5, increasing to £10k?) to be spent *first* before the exemption is granted. I’ve also heard of 5yr exemptions, with further expenditure due to gain another exemption.


    Yes Luke I think you may well be right there , I'll turn 69 next week so when this all this happens will I be bothered ? will I still be here ? but yes it's going to be a real problem for younger landlords and tenants, I've had a good run and enjoyed it, so glad I'm the age I am, wouldn't want to be young in today's Britain, many young are leaving this country, who can blame them ? I would be on the move if I were young

  • icon

    😂😂 Good lord is this article attempting to justify this total nonsense ! Read my lips 👄 “ I AM SELLING “, EPC of C is bad enough…. But a B by 2030 😳😳 what are the government smoking.

    Zoe S

    It’s absurd- Current new builds are not even required to be built to an EPC rating B!

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    Is this article right … I thought only non domestics to EPC B in 2030 ?!
    Problem I have with these EPC changes are my properties are back to back terraces in the north where rent is less and profit is circa 3k a year. That’s over 3 years to just make up for retrofitting. Plus the rent lost with no tenants in.
    Seems silly to have a one size fits all solution on this.
    I’m waiting until the last minute and hoping for the government to kick it into the long grass once they realise its not feasible.
    If it does go ahead will weigh up sale and purchasing costs vs retrofitting costs. Ultimately tenants will suffer the most as they will be evicted or have to live through one hell of a mess.

  • icon

    My God. Can this article hear itself??

    ‘Why not spend an absolute fortune complying? You should shovel tens of thousands into your property by remortgaging or borrowing far more than you’d ever need to normally!’

    This was never a sensible option in the first place, but with Section 24 slamming your borrowing costs it’s still not a viable action for most.

  • icon

    I have spent close on a million externally insulating my block of 100 flats. One went from a C to a D because of the ever changing goal posts an no doubt the different attitude of the EPC assessor.

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    The author of this article has a vested interest in people taking out another mortgage.


    Exactly !

  • PossessionFriendUK PossessionFriend

    If the Govt are concerned with Energy efficiency and Net Zero, then EVERY Home should be subject to same energy requirements, that's All rented property and Owner -occupied.
    ( Don't panic, Govt would be out on its ear at next election )


    Yes but what are the next set of idiots going to be like

  • Zoe S

    On a positive note can you imagine how much worse it would’ve been for us landlords if a labour government (namely Jeremy Corbyn) made it as PM. There may be some miraculous turnaround with the new PM?. I’m not giving up all hope just yet, but will have a plan B in place for “worse case scenario”.


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