The real estate finance division of Secure Trust Bank has relaunched a residential investment loan with the aim of incentivising small to medium sized investors to invest in energy efficient homes.
The loan is designed for investors looking to purchase or refinance residential assets where over 90 per cent of the total floor area has an EPC rating of A-C.
Offered on loans exceeding £2mn, STB has said investors in such properties can benefit from an interest rate which is more favourable than STB’s standard residential investment loan.
The loan is being relaunched after its first iteration saw around £150mn of investment from STB secured against 525 A-C rated dwellings over six months last year.
STB’s head of origination, Chris Daly, said the relaunch was in response to mounting pressure on the residential property sector to raise energy efficiency standards.
“It is vital that we do all we can to reward and incentivise greener practices through attractive funding options,” Daly said.
“Our green investment loan has been introduced to provide greater scope for investors to acquire or maintain an existing stock, or release equity to fund further energy efficient residential projects,” he added.
Currently, ONS figures show more than half of the homes in England are rated D or below for energy efficiency with expectations that the regulatory requirements of UK landlords will tighten ahead of the Future Homes and Buildings Standard in 2025.
Under the terms of the loan, STB will offer a variable rate of 2.95 per cent over the Bank of England interest rate for an LTV up to and including 60 per cent, with that rate increasing to 3.10 per cent for an LTV up to 65 per cent.
Last month, Association of Mortgage Intermediaries's chief executive Rob Sinclair said tackling green finance was going to be the biggest challenge facing the mortgage industry for years to come.
jane.matthews@ft.com
