MortgagesJan 18 2023

Mortgage advisers could be doing more on EPCs

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Mortgage advisers could be doing more on EPCs
Photo: Dmitry Marchenko | Dreamstime

Mortgage advisers could be doing more when it comes to conversations around energy performance certificates and energy efficiency in properties, the Mortgage Advice Bureau has said.

The comments were made after a survey by the mortgage intermediary revealed that only one in 10 of the 2,000 respondents had spoken to their mortgage adviser about a property’s EPC.

The survey also revealed that two-thirds of homeowners had no idea of the government’s target for properties to have a minimum of a grade C EPC rating by 2035, or the shorter deadline of 2025 for private rental accommodation.

At the moment new rental properties must only have a rating of F or G but under government proposals all tenancies should be rated C by 2028 while new tenancies should be rated C or above by 2025.

Mortgage adviser and managing director of Henchurch Lane Financial Services, Paul Holland said these changes are coming at landlords “like a high speed train with no brakes, and landlords must ready themselves for impact.”

According to the Department for Business, Energy and Industrial Strategy, 46 per cent of all homes currently have an energy efficiency rating of C or above, up from 13 per cent in 2010.

Holland pointed out this means many landlords will need to invest a lot of money to ensure properties are up to date.

His advice for landlords is to use an accredited energy performance assessor as their prices are reasonable and they will be able to provide some ideas on how to maximise a rating - for example by installing some additional insulation.

Difficulties for landlords

According to Holland, the proposed new regulations could signal some issues for landlords who wish to sell their properties.

“They may have an issue if they wish to sell a property that is not meeting regulation with a low EPC, they will certainly struggle to sell this to another buy-to-let investor,” Holland told FTAdviser.

He also noted that the proposed changes may cause issues for landlord’s whose properties cannot meet the criteria.

“Some homes have been designed and built in a way they need to breathe, unfortunately this doesn’t help when you are battling to keep the heat in. 

“Around 10 per cent of homes in the UK are currently unable to achieve a C rating. What does this mean for them? What will the government do to help these people?,” Holland asked.

There remains a lack of knowledge about this deadline or the benefits - aside from reduced energy bills - that come with higher EPC ratings Ben Thompson, Mortgage Advice Bureau

His number one tip for advisers when it comes to EPC ratings is to address the topic with clients as soon as possible.

“Early talks with landlords are key to meeting deadlines and rather than wait until the eleventh hour it might be a good idea for the landlords to take action now, and spread the cost over the next few years,” Holland said.

According to the research from MAB, 64 per cent of people are unaware of their properties' EPC ratings.

Of those that did know, 27 per cent said it was because they were interested in making changes to improve it, while a third said they were inclined to do so because they saw the impact raising an EPC had on their friends or families’ bills.

MAB deputy chief executive, Ben Thompson said advisers are in a position to open the conversation about property energy efficiency and can make it a more thought-about aspect of property ownership.

“The government’s deadline of 2025 for private rental accommodation is fast approaching, and landlords will need to act soon with regard to retrofitting older properties. However, there remains a lack of knowledge about this deadline or the benefits - aside from reduced energy bills - that come with higher EPC ratings,” Thompson said.

“When people think about upgrading their EPC rating, many will think of the impact it will have on their energy bill and the climate. However, it can also make you eligible for green mortgage deals that often come with incentives such as lower interest rates. 

“Retrofitting and upgrading your property’s EPC can also increase the value of your home, as homeowners strive to be more energy efficient," he added.

Back in 2021, a survey by Natwest found that mortgage brokers were not prioritising the energy performance of properties in their advice to clients, with some dubbing the topic “virtually unspoken of" and “unconsidered” in the mortgage buying process.

More recently, green homes have climbed higher on the list of priorities for advisers, but groups like the Mortgage Climate Action Group have urged advisers to educate themselves more on the topic to better serve their clients needs.

According to Moneyfacts there are currently 533 ‘green’ mortgage products available on the market from both high street and specialist lenders.

jane.matthews@ft.com