Mortgages  

Landbay launches green BTL mortgage

Landbay launches green BTL mortgage

Specialist buy-to-let lender Landbay has launched its first range of green mortgages in a bid to incentivise investments by landlords into energy efficient rental properties.

Landbay is the latest lender to unveil mortgage products in support of the UK government’s October-launched consultation.

It outlines proposals to upgrade as many homes as possible to an energy performance certificate (EPC) Band C by 2030.

All Landbay’s green products offer a 0.1 or 0.05 per cent rate reduction, compared to their non-green counterparts. The lender is offering five-year fixed rates of between 3.15 and 3.30 per cent, for up to 75 per cent loan-to-value mortgages.

Buy-to-let landlords can take out these lower rates on properties which have been registered with an EPC rating of C or above for at least two years.

“We hope our green mortgage range will [...] incentivise more landlords to consider adding energy efficient properties to their portfolio,” said Paul Brett, Landbay’s managing director for intermediaries.

The same month as the government's EPC rating proposal, the Intermediary Mortgage Lenders Association (Imla) released research which suggested consumer awareness of 'green mortgages' was low, but that the market was “poised” for growth.

The trade association found 43 per cent of consumers had never heard of a green mortgage. But Imla also found 57 per cent of lenders planned to launch a green mortgage offering after the pandemic. 

“A number of lenders have recently introduced eco-friendly mortgages which usually reward customers with cashback, or a lower interest rate if their property has a high EPC rating,” Luke Spellman, a self-employed Coventry-based mortgage broker, told FTAdviser.

“Rewarding homeowners and landlords can only be a positive thing, as it encourages them to go that extra mile when renovating their properties.”

Spellman added the inclusion of such products in lenders’ portfolios would attract future buyers with the prospect of saving on their bills. 

Alongside Landbay, Dudley Building Society also launched its green mortgage range earlier this month. For buy-to-let landlords, it offers a three-year fixed rate remortgage at 3.79 per cent with a loan-to-value of up to 70 per cent. 

As well as getting the majority of EPC ratings up to C, the UK's green objectives also include a legal obligation to achieve net zero carbon emissions by 2050. This commitment forms the basis of prime minister Boris Johnson’s ‘Ten Point Plan’, which promises to mobilise £12bn of government investment.

Until the end of March, the government had offered homeowners and residential landlords a ‘Green Homes Grant’ voucher towards the cost of installing energy efficient home improvements.

There is fear amongst the industry, however, that these green initiatives could devalue homes owned by those unable to afford the improvements to their EPC ratings.

And with the Green Homes Grant no longer in circulation, this means there is less government funding to foot the rising green bill for both homeowners and landlords.

ruby.hinchliffe@ft.com