Pepper launches free energy-efficiency property check for landlords

The specialist lender said the initiative was aimed at helping customers make their homes more energy efficient. In addition to a free energy efficiency survey, and EPC certificate, customers will be offered a tailored action plan.

Proposed government rules require all rental properties to raise minimum energy efficiency standards from A to C within three years, up from a minimum of E now is a huge challenge for the industry.

Data suggests 60 per cent of the UK’s current housing stock is rated D or below and research estimates average upgrade costs range from £6,000 to £10,000.

The regulations are expected to be introduced for new tenancies first from 2025, followed by all tenancies from 2028.

Pepper Money said it could offer customers a second charge mortgage to finance any energy efficiency improvements recommended by the suggested plan. For any customers who undertake the suggested works, a second EPC can also be claimed to validate the improvements.

In January, Pepper Money improved its criteria to remove restrictions around properties with solar panels. Last year, launched a partnership with Ecologi which committed it to providing ongoing financial support for tree planting and carbon reduction activities.

Laurence Morey, (pictured) chief executive of Pepper Money, said: “At Pepper Money, we understand that we have an active role to play to change the way our industry is impacting our environment. We know this won’t happen overnight but will be the result of many consistent positive changes and helping our customers to better understand the impact they and their properties have on the environment.”

Danny Belton, head of lender relationships, at Legal and General Mortgage Club added: “This is a strong statement of intent by Pepper Money, which has recognised the size of the challenge currently facing the industry. By providing free EPCs and an option for customers to borrow to make improvements, this initiative is directly enabling positive outcomes. In the long term, this will mean that not only will more customers have an accurate picture of the current state of their property, but also that they will have access to the knowledge and resources they need to make their homes more environmentally efficient.”

Funding the cost

Pepper Money is the latest provider to join the raft of specialist lenders targeting this market to support landlords meet EPC requirements.

Sundeep Patel, director of sales at Together, also suggested some tips for landlords in this position and the brokers who may be advising them.

He said: “If your property is found to fall short of the required rating, you could face a fine of up to £30,000. Plus, you’ll have an unlettable property on your hands, which is not only a waste of essential residential resource, but also means you’ll incur a loss of rental income.”

Patel said regardless of whether there would be general upgrades or a larger scale of improvements, short-term funding like a bridging loan or a longer-term arrangement such as a second charge loan could prove a good choice.

Patel said: “Securing a bridging loan against your rental property, or another property in your portfolio, could allow you to make the investment necessary – if you’ll need less than 12 months to complete the required work. After you’ve made the improvements, and potentially increased the value of your property, you could refinance onto a new buy-to-let mortgage.”

He added for consumers with a great rate who do not want to refinance, a second charge loan could be more suitable.

“The second charge mortgage will run alongside, but independent of your current one – so if you want it to end sooner that your existing buy-to-let mortgage, it can. In fact, you can borrow over as little as four years.”

Tactics to prepare for the eco-changes include switching to LED lighting throughout the property, insulating walls and installing a new energy efficient boiler. Landlords can also replace old windows with double or triple glazing, install a smart meter and consider solar panels or ground source heating.