A leading mortgage broker has warned that government efforts to force landlords to upgrade properties to a minimum ‘E’ EPC rating are beginning to filter through more frequently into the mortgage lending system.
It has been illegal to rent out a property with a EPC rating of F or G since April 2018 but, as LandlordZONE reported recently and despite fines of £5,000, landlords are very lightly policed; at best 6% of local authorities taken enforcement action recently.
Instead, the government has sought to enforce compliance at arms-length by requiring buy-to-let mortgage firms to check if a property has the minimum legal EPC before lending. This can be checked online via the government’s digital service, but it’s currently only a guideline.
“Where a rating of below E is identified, the customer may be required to carry out the work prior to completion or after completion pursuant to an undertaking,” says legal firm Colman Coyle.
“But despite this, these guidelines have only recently begun to show themselves within the mortgage lending process”, says Dan Lee (pictured) of Total Landlord Mortgages, who is seeing more loans held up by EPC rating complications.
He currently has four which are being re-assessed. “What few landlords realise is that it’s the surveyors who hold the key here – lenders in reality only suspend a mortgage application if a surveyor highlights that a property doesn’t have the correct EPC rating,” he says.
“Nevertheless we’re seeing more of these initial suspensions coming through and it means we have to work hard with the lenders and landlords to obtain the EPC – it’s a complication at a time when the property sales process is already weighed down by the post-lockdown buying boom.”