SPECIALIST FINANCE INTRODUCER
BUY-TO-LET
Think long-term Mark Whitear director of commercial development, Foundation Home Loans
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n a fast-paced mortgage market in which we are seeing significant changes to rates and pricing, particularly in the here and now, it is important not to lose sight of some of the longer-term issues that need to be addressed. While we appreciate that, given the nature of today’s mortgage industry, everyone is trying to work within fast-changing parameters and perhaps second-guess what might be coming over the horizon, it is necessary to look a little farther into the future. Indeed, you can marry up today with what may come, in the form of energy efficiency, carbon emissions, and the need to address both within the UK’s housing stock, particularly – as a priority – within the private rented sector (PRS). While we have yet to have confirmation that all PRS properties will need to be EPC C and above from 2025/2028 onwards – for new/existing tenancies – we have to work as if this were going to happen. This will be especially pertinent for those landlords who are seeking to remortgage or purchase mortgage products right now, and they need to be made aware of how any changes will affect their ability to let these properties. First up, for advisers who are in full education mode for clients, it’s important to understand why this is an issue. Twenty per cent of carbon emissions emanate from our housing stock, and we have the potential to reduce annual emissions by five million tonnes if all D-rated properties move to a C. This would also be a huge step toward meeting the COP26 commitment made by the UK to be net zero by 2050.
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You can therefore understand why this bill was brought forward as a means to improve the minimum EPC banding for tenants – but it has become even more important given the focus on high utility bills and the ways and means by which we can keep these down. Many landlords may not even be aware of what the EPC rating for their property is, but you can find each one online, and this not only covers estimated energy costs, energy efficiency, and performance in preventing heat loss, but it also gives ideas on what can be done to improve the level and the potential cost. These costings can be highly
MORTGAGE INTRODUCER NOVEMBER 2022
important, particularly within a remortgage discussion where the landlord might wish to release some capital value in order to potentially pay for any work required to make those improvements. The four key areas to look out for in an EPC are: Points in bands: this is the points representation of the government’s standard assessment procedure (SAP) range, a calculation based on different aspects of the property relating to energy creation, storage, or use. Letter grade: a simple representation of which SAP band the property falls in. www.mortgageintroducer.com
