Emily Machin

How refurbishment BTL could help landlords struggling to meet EPC targets



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We all know there’s more we can be doing to make our homes more energy efficient.

Whether it’s upgrading an outdated boiler, improving the insulation in the loft and walls, or installing new windows and doors, there’s lots we can do to ensure we’re doing our bit for the environment — as well as reducing our household bills.

It’s why the government introduced the Energy Performance Certificate (EPC) back in 2007. Now, whenever a property in the UK is built, sold or rented out, it has to have a certificate showing how much energy it uses and how it rates in terms of efficiency based on factors such as heating, insulation and energy conservation.

All properties now have a rating from A (most efficient) to G (least efficient). This includes rental properties, which must have an up-to-date EPC and be made freely available to any prospective tenants.

The government’s Clean Growth Strategy (CGS) in 2017 set out its goal of ensuring that as many homes as possible are upgraded to EPC band C by 2035. In the private rented sector, the CGS went even further by saying the preferred policy scenario is that improvements for new tenancies are achieved by 2025, and for all tenancies from 2028.

Properties with an EPC rating of F or G are now considered unrentable, with any landlord found not to be complying with the new rules at risk of a fine of up to £5,000, as well as being named and shamed in their local authority’s PRS Exemptions Register.

So where do brokers turn if they’re approached by a customer who’s looking to quickly buy a property as a rental opportunity — for example, one they’ve seen at auction — but who needs finance to bring it up to the minimum EPC rating before letting it out?

Landlords have traditionally faced difficultly in securing the funds to carry out improvement work, but this is where refurbishment BTL could help. 

Refurbishment BTL brings together the flexibility of bridging finance with the surety of an exit onto a long-term BTL mortgage once any improvement work has been completed, providing the property meets the expected valuation following refurbishment.

Our refurbishment BTL offering could be ideal for landlords looking to make changes to a property that can be completed within six months, and which are classed as either light refurbishment or work completed under selected Permitted Development Rights, where there is no change to the footprint or structure of the property. This includes carrying out work to meet the minimum EPC rating, such as replacing a boiler. 

We’ve also made the process of applying for this type of finance as easy as possible. Brokers only need to submit one application, which we’ll key in for them, and will receive support from one expert underwriter throughout the whole case. One valuer will assess the property (where possible) and one conveyancer can act on the application. Finally, two offers will be issued: one for the bridging element and one for the BTL mortgage.

Raising the minimum EPC rating will improve the conditions for tenants living in rental accommodation, as well as having a positive impact on the environment — but landlords could face a struggle finding the right product to assist them in making their properties meet the new standards.

Luckily for brokers, it should be reassuring to know there are specialist lenders out there who could help.

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