Under these new laws, buy-to-let landlords are required to upgrade levels on all investments rated as an F or G to at least E – the minimum energy efficient standard by which properties can now be legally rented.
Penalties for those who fail to comply with the new standards are inordinately steep.
They rise from a maximum £2,000 on residential properties to £4,000 (depending on whether they have been rented for less than three months or more) and from £5,000 (or 10% of the rateable value of the property) to £10,000 or 20% on commercial properties.
In addition, escalating costs incurred by necessary upgrade work (encompassing everything from wall, loft or roof insulation to glazing, lighting, draft proofing, replacement of boilers or installation of renewable energy sources) are likely to prove a drain on financial resources for many landlords, especially for those with extensive portfolios.
£2,500 upfront costs
According to a report by the UK Green Building Council, for example, the estimated average costs required for raising an energy deficient property to the minimum E standard could be as much as £1,400 – a jaw dropping figure.
With recent government proposals requiring landlords to pay upfront costs on the first £2,500 of any undertaken work, moreover, access to finance will undoubtedly play a critical role in defining the speed and ease with which property investors achieve EPC standards.
But, the amounts involved could prove prohibitive for many.
Indeed, David Cox, the chief executive of ARLA Propertymark, has claimed that thousands of landlords are now removing non-compliant properties from the market to avoid fines and facilitate remedial building work as rental stock figures plummet to their lowest levels since May 2016.
Some experts have cited a possible lack of funds to explain this trend, but with the April deadline for MEES (minimum level of energy efficiency) work now gone and mainstream lending criteria proving generally unresponsive to this type of demand, what options exist for cash-strapped landlords?
Absent mainstream lenders
Well, the answer is actually very simple. Bridging loans can provide an immeasurably speedy and flexible means for landlords to implement required efficiency standards across entire portfolios, with specifically tailored refurbishment packages of between £26,000 and £5m available from a wide range of specialist lenders.
Deals like these can sometimes be processed within a matter of days, effectively catering to landlords who are anxious to get work done quickly and put their properties back out onto the market.
They can also be used to snap up discounted properties which fall below legislative standards and then renovated to meet MEES.
Most importantly, in the near absence of support from mainstream lenders, bridging loans provide landlords with a lifeline.