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How A Low EPC Rating Can Affect Your Buy-To-Let Mortgage

MORTGAGES | 28.05.2021

When looking for a buy-to-let mortgage, it’s important to keep in mind that a good Energy Performance Certificate (EPC) rating goes a long way in securing your loan. Regulations introduced in 2018 make it illegal to instigate or renew a lease on a property with an EPC rating of F or G, so before you invest in property or try to secure a mortgage against a property you already own, take a look at this guide on how a low EPC rating can affect your buy-to-let mortgage.

What is an EPC rating?

An EPC rating is a review of a property’s energy efficiency. It gives buyers or renters a good indication of how much their energy bills will come to in their new home. The EPC survey is carried out by assessors before producing the EPC, which is then placed on a colour-coded scale from A to G, with A being the most efficient and having the cheapest energy bills. If your property has a rating of F or G, it doesn’t meet with the new Minimum Energy Efficiency Standards which became law in April 2018. 

What are the minimum energy efficiency standards?

The minimum energy efficiency regulations which came into force in England and Wales on the 1st April 2018, applies to private rented residential and non-domestic property. From 1st April 2023, the standards will be applied to all commercial rented property. These regulations mean that any property on which a new lease is being granted must not have an EPC rating of F or G.  They were introduced to encourage landlords and property owners to improve the energy efficiency of their properties. A low EPC rating can prevent you from getting a mortgage for a property you wish to buy, or one you already own. It’s also difficult to secure a mortgage for an additional property if you already have some in your portfolio with low EPC ratings. 

Are there any exemptions?

You must comply with the updated Minimum Energy Efficiency Standards (MEES) regarding existing tenancies, but there are a number of exemptions which may apply to your situation: 
  • Exemption due to devaluation - a temporary exemption of 5 years will apply if you can show that the installation of energy efficiency measures would reduce the value of the property by more than 5%.
  • New landlords - if you have become a landlord recently or suddenly in specified circumstances under the MEES Regulations, you will be granted a temporary exemption of 6 months.
  • Third-party consent - if you’re unable to obtain necessary third party consent to improve the EPC rating, then you may let a ‘sub-standard’ property.
It’s also worth noting that some listed buildings, or properties that are within a conservation area, aren’t required to have an EPC in place, but not all. As a landlord or property owner, it’s your responsibility to check whether or not an EPC is required for your building and to arrange a survey if so. 

How to improve EPC rating

Before you can renew your existing tenancies or let out new ones, you’ll need to bring your property up to the required standard if you want to boost your chances of getting a buy-to-let mortgage. Here’s some easy ways you can improve your property’s EPC: 
  1. Insulate the walls and roof
  2. Switch to LED light bulbs
  3. Install a smart meter
  4. Look at getting double or triple glazed windows
  5. Upgrade your boiler 
If you’d like more advice on getting a buy-to-let mortgage, please don’t hesitate to get in touch with TaylorMade Finance. As mortgage brokers in Manchester, we can help you through every step of the mortgage application process and identify the lenders with the best buy-to-let mortgage rates. Get in touch here or call 0345 305 2540.
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