0:01 AM, 18th June 2025, About 7 months ago
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Buy to let lenders are adapting to meet proposed energy performance certificate (EPC) regulations by focusing on properties that already have higher energy efficiency ratings.
Representatives from lenders and valuation firms at a recent industry event cautioned that competition for EPC band A, B and C properties could intensify within a year or two, potentially marginalising landlords with less efficient homes seeking mortgage finance.
New government rules look set to mandate a minimum EPC rating of band C for private rented homes starting with new tenancy agreements from 2028, extending to all privately rented properties by 2030.
These deadlines pose huge challenges for landlords wanting five-year fixed rate buy to let mortgages on properties with EPC ratings below band C.
And now a study by Cotality, a property data specialist, has found that some lenders may refuse loans if a new tenancy could begin after 2028 but within the mortgage term, exposing them to regulatory risks.
Mark Blackwell, the firm’s chief operating officer, said: “There is a clear desire in lenders to act to mitigate the impact of climate change, starting with the climate risk sitting on their own loan books.
“There’s an imminent regulatory deadline that requires them to do it, but during our research we found that without more robust data inputs and better access to model scenarios, many aren’t as far on as they want to be.
“There are ways to address this, and our research highlighted that lenders are taking a wide range of approaches.”
He added: “What was common to all though, is that meeting the challenge of net zero is not straightforward, and it will require the co-operation of all parts of the market to achieve it in such a short time.”
A recent report, Temperature Check 2025: How prepared are buy to let lenders for future property risk?, commissioned by Cotality, sheds light on these shifts
The study, based on insights from credit and risk executives at lenders, reveals that some are already adjusting their lending criteria to mitigate ‘Net Zero risk’ when approving new loans.
Others are exploring ‘dynamic data sources’ to modernise how they evaluate environmental risks and energy performance at the property.
Potential data sources highlighted include smart meter data for real-time energy consumption insights, half-hourly electricity usage profiles, weather and flooding data from the Environment Agency and Met Office.
The potential list also includes satellite imagery for land movement, and open geospatial datasets from Ordnance Survey.
The government’s EPC database and local council records on property retrofits also feature prominently.
However, the report notes that not all lenders are fully prepared.
Many described their access to such data as ‘patchy’, hindering their ability to make informed lending decisions.
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