BTL lenders asking for EPC C or above?

BTL lenders asking for EPC C or above?

9:56 AM, 2nd August 2022, About 2 weeks ago 31

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Just a heads up for everyone – I’ve recently remortgaged to fixed rate products due to the continual increase of the Bank of England Base Rate and, no doubt more to come on the 4th of August!

In every instance, the mortgage lender has stipulated the EPC rating must be C or above in order to gain the new product.

I think this will be across the board with all mortgages now, soon or in the future, regardless of it not being a statutory requirement (as yet) to rent out our properties.

Has anyone else found this issue yet?

Ann



Comments

Martin Harrington

23:39 PM, 3rd August 2022, About A week ago

Reply to the comment left by PaulM at 02/08/2022 - 12:58
An air source heat pump is classed as an electric heating system- the worst type of heating- plus is not a renewable energy source. This will cause mayhem with the new minimum energy standards when the C rating kicks in.

Lee Oliver

6:20 AM, 4th August 2022, About A week ago

The lender they are talking about require a C grade at 75 LTV. But will offer a mortgage for lower graded property but you would not at least a 35% deposit. The lower the deposit the higher the risk is how the banks see it. Many are now offering green mortgages too which will be a cheaper product (lower rate, lower product fee or cash back) for properties valued A to C or in some case A to B.

Hope this helps.

Beaver

9:48 AM, 4th August 2022, About A week ago

Reply to the comment left by Jason English at 03/08/2022 - 13:12
Fascinating article and I am interested thank you. I found this bit telling:

"It is widely assumed that heat pumps work better in well insulated houses and struggle in poorly insulated ones. All heating system run more efficiently and cost less to run in well insulated buildings, and this is not a factor that is unique to heat pumps. In fact, we find little correlation between how well insulated a dwelling is and the performance of the pump as long as the heat distribution system is sized correctly. By far the biggest influence on performance is user behaviour. Where customers have reported high bills, we invariably find it is in new buildings with underfloor heating and the cause is often traced to one room thermostat turned up to 23°C or more and all the windows open! The room cannot, of course, reach temperature and calls for heat constantly causing the heat pump to run continuously. This is down to customer education not the efficiency of the pump."

Having read this article I can't help but feel that the average consumer has little chance of understanding this. As a landlord reading this bit that I copied and pasted I doubt there would be any benefit in my investing to change my rental property from a modern gas condensing boiler to anything else. I also recently had a surveyor out to look at my own PPR and her comment on Ground Source Heat Pumps was that they were expensive to install and difficult to maintain. I have struggled to find reliable in formation on GSHPs.

Ann Shaw

9:48 AM, 4th August 2022, About A week ago

Hi TD,
I used two brokers, and both commented about the EPCs which lenders are now asking for to be C or above.
The mortgagees were BM Midshires and HSBC - BM had to refer my case to an underwriter, as I am classed as a 'Portfolio Landlord', whereby bank statements showing rental payments collaborated with the ASTs shown. Also, because I am a 25% shareholder in a separate limited company, I had to show business accounts and company bank statements. Much more information had to be gathered than when I initially took these products out some 15+ years ago!
The Surveyors who came out (some surveys were carried out remotely), stated that they look for EPC C nowadays.
I don't know about higher mortgage rates for EPC D, I'm afraid, as the properties I have are bands C and B.
I hope this helps.

AP

7:50 AM, 6th August 2022, About A week ago

I’ve just remortgaged two properties with two different mainstream BTL lenders. They both have a D rating and I had no issues but my LTV is less than 50% .
I’m in the process of remortgaging another with a C rating and that lender offers a better rate if the EPC is C or higher (calling it their ‘green mortgage’).
I have no idea how I’m going to raise the two D rated Victorian properties. The only thing I can do is new windows (which in itself is going to cost approx £12k per flat). External insulation is not possible (conservation area) and internal insulation will require massive refurbishments (and ruin beautiful original features that is one of the reasons the flats are in demand!)

Seething Landlord

10:03 AM, 6th August 2022, About A week ago

Reply to the comment left by AP at 06/08/2022 - 07:50You will just have to hope that the exemptions cater for your situation. Yet another grey area.

Seething Landlord

10:35 AM, 6th August 2022, About A week ago

Reply to the comment left by Beaver at 04/08/2022 - 09:48
I agree that it is a fascinating article and confirms the suspicions that I and many others have have had for some time regarding the efficiency of the EPC rating system and the lack of joined up thinking on the part of government.

Perhaps it is wishful thinking but I wonder whether the delay in publishing their response to the consultation on the MEES regulations is an indication that they have started to recognise the inconsistencies and are trying to reconcile them to make the whole system more fit for purpose.

Michael Johnson - Amzac Estates View Profile

11:03 AM, 6th August 2022, About A week ago

As an update to my previous comment, we are in negotiations with a new lender for our whole portfolio ( which is what we have now) but it seems they don’t like mixing commercial and residential properties so we are a bit limited. However the new lender has only asked if we have funds available in case the C proposal does actually happen, which I found very refreshing in this day and age as it is so relevant rather than ‘green’ gimmicks which I am seeing with the mainstream buy to let lenders. So I guess it’s an option to demonstrate to a new lender that you can fund the EPC improvements if required depending on an ever changing landscape

Wayne Church View Profile

20:54 PM, 6th August 2022, About 7 days ago

Reply to the comment left by Martin Harrington at 03/08/2022 - 23:39Hi Martin this is not actually correct. Heat pumps score far better than electric boilers as they are far more efficient.
A few years ago inputting a heat pump gave a poor rating when compared to gas boilers but now most models are found on the database they score really well.
GL

Seething Landlord

9:15 AM, 7th August 2022, About 6 days ago

Reply to the comment left by Wayne Church at 06/08/2022 - 20:54
Which database are you referring to? Are different makes and models of gas boilers and storage heaters also listed?

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