Nations from across the globe came together to thrash out how we are going to adapt our way of life in order to do a better job of protecting the planet.
Our own government has already been open about its ambition for us to be net zero by 2050, and one of the key aspects of hitting that target will be addressing our ageing housing stock. Studies have found that our housing was responsible for emitting 67.7 metric tonnes of carbon dioxide equivalent in 2020, which amounts to around one-fifth of all emissions across the UK.
Evidently, there is much work to do in improving the emissions status of our property.
Raising the bar
In order to encourage this, the government has consulted on increasing the minimum EPC rating of houses in the private rented sector to C by 2025 for new tenancies and 2028 for all tenancies.
Understandably, this will focus the thoughts of landlords towards ensuring their portfolios hit the minimum standard. But, as an industry, we can go further in providing a helping hand to landlords who want to do the right thing.
Incentivising landlords to go green
At LendInvest, we want to play our part in encouraging landlords to improve the emissions performance of their portfolio and are incentivising them to do so through our newly launched EPiC range of mortgage products.
That incentive comes in the form of reduced interest rates and fees for landlords based on the EPC and environmental impact rating (EIR) rating of the property. Those with an EPC rating of at least a C will qualify for a rate discount of 10 basis points, on top of a 25 basis-point reduction on fees.
That rebate is available across the full range of property types too, from standard BTL homes and new builds, to houses in multiple occupancy and multi-unit freehold blocks, serving to motivate landlords of all stripes — no matter where they have invested.
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As it currently stands, focusing on the emissions status of a property is only one aspect. Encouraging landlords to focus their efforts on green homes is all well and good, but what about those homes that don’t currently meet the required standards?
Our EPiC range addresses this too, with a further 10 basis-point (20bp in total) reduction for borrowers transitioning from one of our bridging or development finance loans to a BTL product. The idea is that landlords and developers will be rewarded, not just for investing in properties that are already delivering on the efficiency front, but also those which are currently below that level but which can be brought up to standard, in the process making them more desirable to potential tenants.
Tenants want green homes
It’s worth noting that while the push to improve the efficiency and carbon footprint of the UK’s housing stock is coming from the authorities, it’s becoming a key issue for tenants, too.
A recent study by rental platform lettingaproperty.com found that 98% of tenants would actively prefer to rent a green home, while half of tenants said they would happily pay a higher rate of rent to do so. It revealed that they are willing to stomach substantial rent increases too; over half (52%) would pay more than 10% extra for a green home, while nearly one in 10 (8%) would happily hand over a further 20% in rent. In addition, a more energy-efficient home will be cheaper to run, particularly as energy prices continue to rise.
Clearly, focusing on the green credentials of a portfolio makes real economic sense for landlords.
Brokers are key allies
Intermediaries have a big role to play, here. The reality is that while some landlords are fully aware of not only the changing regulations with regard to the energy efficiency of let properties, but also the growing clamour among tenants for green homes, for others, the subject has rather passed them by.
Brokers are perfectly placed to educate those landlords and demonstrate the ethical case for improving the green credentials of their portfolio, as well as the financial draw.
Property investors recognise the crucial part that brokers play; they are business allies, not someone who can simply help them pinpoint a decent mortgage deal. Investors trust their brokers, meaning they are perfectly placed to help their clients get ahead of the curve and cut the carbon footprint of their portfolio.
Consequently, leaving it to the last minute will be a dangerous, and potentially costly gamble.
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