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How can landlords afford to upgrade their properties to EPC band C by 2025?

paresh raja landlords

Like almost all industries the housing market is increasing its efforts to tackle climate change.

Households account for 40% of the UK's carbon footprint and the government has forced landlords to move more quickly than others, and from 2025, all properties in the private rental sector will need to have an EPC of C or higher to be let to new tenants.

Also, lenders are increasingly offering '�green finance' for sustainable properties, encouraging landlords to increase sustainability.

For example, banks have said that borrowers will only need a 10% deposit on loans of up to �25,000 for a '�green advance', while others are offering a green cashback scheme worth �500 for eco-upgrades until March 2022.

So, with the chancellor reducing VAT on energy-saving features in the Spring Statement it is certain that '�green' investments are going to become a lot more prominent.

Read more about the Spring statement.

Eco privilege

That said, the cost of renovations could price out many landlords, leading to '�eco-privilege' in the market.

Thus, with fines of up to �30,000 for non-compliance, many landlords will need to pay thousands to renovate their properties to achieve an EPC rating of C or higher.

For affluent landlords who can afford to renovate outright, this will not be a huge issue and could be a benefit as they will be able to access favourable mortgage rates and other '�green' finance options.

But landlords who cannot afford to make the changes will be left with less affordable loans and an already problematic affordability crisis could become a lot worse.

Problems bridged

The bridging sector can assist landlords in accessing favourable '�green' finance options and limit the effects of '�eco-privilege'.

Such loans can bridge the gap between the beginning of a sustainability refurbishment project and the acquisition of a '�green' finance solution.

Whether they are used to purchase a property at auction then renovate it before a landlord finds a long-term financial solution, or because a landlord simply needs to free up capital to pay for the renovations, bridging loans can empower a wider range of landlords to access '�green' finance for their long-term financial needs.

Fairness of the market can be protected, and the industry will become more sustainable overall.

In the build-up to the introduction of the new EPC regulations, it is vital that landlords plan a timeframe for their renovations and carefully consider their financial options.

Lenders with experience and expertise should assist landlords in doing this, and those who can successfully navigate the next few years can expect to capitalise on the benefits of '�green' finance options.

Author bio: Paresh Raja (main pic) is the founder and CEO of Market Financial Solutions (MFS), a London-based specialist lender that provides bridging loans and buy-to-let mortgages.


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