Despite the planned overhaul, landlords are still prioritising improving EPC ratings in their properties. What are you planning, and how could you fund your energy-efficiency improvements?
According to a study by Finbri, over 70% of UK landlords plan to carry out EPC improvements on their rental properties this year, a slight increase from the 68% who planned energy-efficiency works in 2023.
Finbri commented: “Our survey found that landlords continue improving their properties to improve EPC standards despite the delay in proposed regulations.
“This underscores their dedication to improving their rental properties and/or pre-emptively mitigating the potential impact of government changes.”
Changes to EPC Calculations and Regulation
Since 2015, landlords have been required to ensure their rental properties had an EPC rating of E or above, which had been set to increase to C or above from 2025.
However, in late September last year, Rishi Sunak surprised the sector by scrapping the proposed changes altogether after a period of silence on the subject and much uncertainty over guidelines and exemptions.
At the time, 80% of UK landlords had already prepared for the changes in EPC regulations. Now, we face a new scheme altogether with the Home Energy Model.
This new model aims to resolve many issues landlords faced under the old EPC calculations, focusing on carbon emissions over the cost of running a property. However, the more in-depth assessments mean it’s likely to cost more, and we’re still unsure what the change in model will mean for existing EPCs.
Currently, EPCs have a ten-year lifespan, so it's essential for landlords who have recently completed energy-efficiency improvements that they don’t need to pay out again under the Home Energy Model. We will keep you updated when we know more.
How to Fund EPC Improvements
Depending on the scale of works required to improve your property’s EPC rating, it can get quite costly, particularly for portfolio landlords with multiple properties to work on.
Therefore, reviewing all funding options available is essential to ensuring you make the most informed property investment decisions.
You might be able to fund the works with a remortgage. If you have enough equity in your portfolio, you could look to release capital from one of your properties to fund the energy-efficiency improvements. This is relatively common and a typically straightforward process, but you must be aware of any early repayment charges (ERCs) on your current mortgage deals. Speak to your broker if you’re unsure.
If you’re still far off from the ERC period, a further advance may be a better solution for you. These allow you to borrow more from your existing lender, and mean you don’t need to break your initial rate, saving you from paying any ERC penalty fees.
Or, you may consider a second charge against one of your properties, which allows you to keep your current rate, and pay for the work on a separate loan.
On the other hand, many landlords fund energy improvements with a bridging loan. This can be expensive, as short-term finance costs are typically higher than standard buy to let loans. However, it’s an excellent option for those looking to make improvements quickly to a property before letting it out to tenants or before your next remortgage is due. You can explore current bridging rates on offer using our bridging calculator here.
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Speak to an expert
If you would like to discuss how you could finance your energy-efficiency improvements, get in touch with one of our expert brokers on 0345 345 6788 or submit an enquiry here.
