We’ve steadily seen this happening anyway – for obvious reasons, not least the massive impact climate change is already having on our planet and what could happen should we not heed the warning of all credible scientists.
The march to net zero is going to be a long and prolonged one for the UK but I don’t think any of us are under any illusions about what will be required, and how central curbing the emissions coming out of the UK’s housing stock will be to delivering on this.
Within the mortgage market, last year definitely felt like something of a turning point in terms of providing a more fulsome array of green-focused products, and, at Foundation, we have products for both owner-occupiers and landlords purchasing/remortgaging properties with an EPC rating of C and above, incentivising those who have properties below this, to move their ratings in order to benefit from these price cuts.
Work to be done
That said, we know there are a huge number of properties below this level and a considerable amount of work is going to be required in order to improve this. At the moment, one wonders whether there is enough credence given to the EPC level of a property, in order to have an impact on its value. After all, it feels like a greater acknowledgement of this will play a major role in getting the improvements we need.
Just recently, I read research from Mortgage Advice Bureau which found that below one-fifth of the population (19 per cent) said they would not consider a property if it was below level C.
Now, I suspect this figure would have been far less a year or two ago. Indeed, the research reveals that 60 per cent don’t know what their EPC level was, but it’s also clear that these issues are now much more of a focus for both owners and potential purchasers, and that may well shift the market in the future in terms of values.
Currently, surveyors/valuers tend to say that EPC ratings and the general energy-efficiency of a property is not having a discernible impact on values, however it seems obvious that this won’t always be the case, especially if we are moving into a world where the cost of energy continues to run at these inflated levels.
Buyer awareness
Certainly, you can imagine both owner-occupier and landlord purchasers being much more discerning about the emission output of the homes they are interested in buying and their energy efficiencies, especially if and when we have mandatory, minimum levels introduced for EPC ratings.
Owners may find they have to settle for offers below other similar local properties in their area based on a lower EPC rating, given that any new owner will need to have work carried out at some point in order to meet these new guidelines, or for example, if they want to let it out to new tenants.
From an advice perspective, there is clearly a growing need to discuss this with clients, in order to ascertain EPC levels, because this may well make them eligible for the incentivised products that do exist.
I suspect we will also see more products focused on the improvement element in the future – offering borrowers a better rate if they can get their EPC level up to the required standard within a certain timescale.
Overall, we, as lenders, are certainly aware of a growing need for such products based on an understanding of what will be required from future government action in this area.
This is likely to be a much more visible part of our mortgage market in the months and years to come – indeed, it already is – and specialist lenders like ourselves are likely to be leading the process to support advisers and their clients in this area.
