Expediting the green mortgage revolution through education and clarity

We’re seeing more landlords carefully assessing the pros and cons of new builds with an eye on a more energy efficient future for their portfolios. By this I mean in light of the government’s plan for a compulsory energy performance certificate rating of ‘C’ on new tenancies by December 2025, and on all rented properties by December 2028. Although, it’s prudent to point out this is not yet set in stone.

This plan has also resulted in a huge amount of talk about how much existing upgrades may cost and with the bulk of portfolios containing large levels of older property types, then landlords have to take these potential costs into account. A factor which is especially relevant as well over two-thirds of landlords reportedly still own rental properties with an EPC rating of D or below.

New research from Shawbrook shows that, at present, only a quarter of landlords’ portfolios contain properties that all meet the C target for energy efficiency and 71% still own rental properties with an energy performance certificate rating of D or below. Landlords estimate that bringing the average property up to a C standard would cost them almost £2,000. However, there is a concern that with the cost of labour and materials going up, landlords could be underestimating the cost of the work.

Education remains the key in arming homeowners and landlords with the knowledge and tools to make properties energy efficient in a cost-effective manner. As it currently stands, too many grey areas remain for landlords when it comes to if, when and how they need to upgrade EPC ratings in order to be able to let out their properties, how much these improvements may actually cost and if any subsidies are included.

Additional transparency is required around this important topic. Lenders and advisers are doing their bit, but lingering uncertainty around potential EPC legislation is certainly not helping to simplify or expedite this journey. And if no clarity emerges soon then the green mortgage revolution could well stall.

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