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BTL2021: Brokers have a chance to build business with green credentials

  • 21/04/2021
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BTL2021: Brokers have a chance to build business with green credentials
Mortgage brokers could be “doing a really good piece of work,” with landlords who need funds to improve their properties’ Energy Performance Certificate (EPC) ratings by 2025, the Buy to Let Online Forum has heard.


Jane Simpson, managing director at TBMC, said: “Brokers should be discussing portfolios with landlord customers and looking at what properties are below a C rating, and then seeing how they can raise money, whether capital raising on that property or across the whole portfolio.

“There’s a really good piece of work that brokers could be doing, that’s going to bring in more business to them, and help landlords as well,” she said.

By 1 April 2025, when a new tenant goes in, buy-to-let homes must have an EPC rating of A to C. For existing tenants, the deadline is 2028.

Phil Rickards, head of BM Solutions, said:  “For many landlords, the timescales could be a challenge. The green agenda is a threat to landlords and their cashflow in having to bring existing stock up to scratch in what could be seen as a relatively short period of time.

“Therefore any help lenders can bring — further advances to help improve properties, better rated products for higher EPC rated properties — will definitely evolve. It’s something we are working very hard on behind the scenes,” Rickards said.

Keystone Property Finance estimated that upgrading a property with a D rating to achieve an A to C rating would cost an average of £3,500, while for an E-rated property, it was £7,500.

Of Keystone’s lending book, about 57 per cent of landlords’ properties fall into the E and D category, 41 per cent are A to C, and two per cent are exempt such as listed properties.

David Whittaker, chief executive at Keystone, said: “Tenants will naturally gravitate to properties with a higher EPC rating, including for savings on utility bills, and therefore landlords might be able to get better rent.”

He said that in the residential market, Barclays, Natwest and AIB had developed offers for A and B rated properties. Meanwhile, “much respect,” was due for an innovative product from Ecology Building Society which offers 0.25 per cent discount for every energy-efficient improvement up to a maximum of one per cent. “I showed it to a pricing colleague who fainted on the spot,” Whittaker said.

He also praised Nationwide’s further advance green product.

In buy to let, Foundation Home Loans and Paragon won special mentions as first movers in green loans.

“At Keystone, we are just launching an A, B and C product focusing on older properties. We’re trying to incentivise landlords with lower-rated properties to do up their properties and improve them, and indeed if clients have a product transfer coming up, we will check the EPC. If it’s A to C, we’ll give you a better-priced product,” Whittaker said.

He added that sourcing systems enabling brokers to search with an EPC rating was “a work in progress.”

“You’ll see more product coming down the line from lenders. If you have a good green credential on your property, but you can’t find those lower prices, you’re all at sea,” he added.

The securitisations market was also supporting green lending, with investors showing interest in green asset classes.

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