In a video series in partnership with Accord Mortgages, Greg Cunnington, chief operating officer at LDNFinance (pictured) said: “Most of our landlord clients have stock in the South East, a lot of which is D to E rated. We’re hearing stories about EPC reports done a long time ago, some clients are spending £20-30,000 on works to get the same rating at the end of it because the legislation is harder now.”
He said landlords need to do the right research, get more information and a clear understanding on what could push the EPC to an acceptable level of A to C.
Liz Syms, owner of Connect Mortgages and Connect for Intermediaries, said: “There are tools that can help, if you’ve had an EPC done recently you’ll see it does make specific recommendations on what can be done to upgrade that rating. Whereas if you bought a couple of years ago, you’ll probably want to get an up-to-date one done and go to the government website* and get that instructed.”
“We need to educate brokers and clients on how to go about it,” she added.
Cunnington added: “As a firm we can help, when we’re contacting landlords having that information to hand, having third parties we know they can speak to, trade bodies that can help, tradespeople to contact, but it is a big opportunity and the whole reason we’re here – to advise.”
Syms said that as a network and for intermediaries, there is an advice risk to consider: “But the devil is in the detail. There’s a lot we don’t know at the moment about what the exceptions are going to be around affordability and the properties, so there’s also a danger around rushing the educational piece and people spending a lot of money and it not doing the job.
“On capital raising – what are the choices? Further advances, second charge – is your knowledge up to speed on all those options? But as an adviser – 50 per cent of the buy-to-let market is on a five-year fix so you’re locking your customer onto a rate that goes beyond 2025.
“If that lender doesn’t offer further advance, as many in specialist markets don’t or allow second charges, the customer will have to pay an early repayment charge (ERC) to capital raise,” she added.
Jeremy Duncombe, managing director at Accord said there are a number of further challenges to hitting the 2025 deadline of an A-C rating on all new tenancies.
“Even if landlords want to make those changes, which they will have to do for all new tenancies, its about getting tradespeople to come in and do that work. It’s also being able to get properties like Victorian terraces up to a C-rating, which is going to be difficult. But lenders can play a huge part in the refinancing opportunities – capital raising, debt consolidation, these are all things we can look at.”
He added at the recent Buy to Let Market Forum events, it was surprising how few brokers seemed to be aware of the deadlines, so those conversations with landlords are really important to have.
See the first part in the buy-to-let mortgage-focused series here on the product gaps brokers would like lenders to fill in the buy-to-let market, which ran on 23 May.
This video has been sponsored by Accord Mortgages. For intermediary use only.