5 things landlords should know about green mortgages
From what was a leftfield way of thinking to a mainstream, everyday goal, going green is an agenda-topping issue in lettings. Green mortgages can help landlords reduce three vital aspects – carbon emissions, fuel bills and mortgage repayments – by incentivising the purchase of the most eco-friendly homes and encouraging the upgrade of the least energy efficient rental stock.
Here are five green mortgage must-knows:-
- Landlords can apply now
Green mortgages, with their more attractive interest rates and borrowing terms, aren’t reserved exclusively for those buying a property to live in themselves. In fact, 15% of the buy-to-let home loan market is devoted to green mortgages, with product numbers at their highest ever level (there were more than 350 green buy-to-let mortgages available as of April 2022).
- The property you’re buying should have a top-end EPC
Green mortgages are offered to buy-to-let investors who are purchasing the most energy efficient properties to rent out. To qualify, there should be an EPC with a rating of A, B or C. It is a legal requirement for every property for sale to have a valid EPC but if you’re in any doubt about the eco performance of any property you want to invest in, please ask us for advice.
- Alternatively, you should be committed to making eco improvements
There is good news for investors who have found a high yielding property that happens to have an EPC of D or below. Some green buy-to-let mortgages are aimed specifically at investors willing to install upgrades to improve the home’s EPC rating. These incentives come in the form of cashback that can be spent on improvements, or a bridging loan that can be converted into a buy-to-let mortgage after work to improve the EPC rating is complete.
- Now is a good time to take out a green mortgage
Whether you are making your first property investment, remortgaging a buy-to-let in your portfolio or are adding something new to your rental collection, considering a green mortgage now is a wise move. With the interest rate creeping up, any home loan that offers an advantage makes business sense, especially if it encourages landlords to install energy efficiency measures.
- Green mortgages & EPC changes go hand-in-hand
The timing of green mortgages is critical, given the EPC changes that lie ahead. Landlords should be preparing now for 2025, when all new and renewing tenancies need to have a C EPC rating. This new standard will also apply to existing tenancies from 2028, and the mandatory expectation may even rise to a B by 2030.
Get in touch if you’re going green
Green mortgages should be the incentive you need to start making energy efficiency changes to a buy-to-let you own or intend to buy. From attractive interest rates and cashback to larger loan amounts to cover eco improvements, what’s not to like? We can help with planning and managing a more sustainable buy-to-let, so contact us today.