Getting a High EPC Rating Could Become Much Easier Soon – Get Ahead of a New Green Boom
By Market Financial Solutions
Being as green as possible is, once again, paramount. The current government recently confirmed landlords will need to have an Energy Performance Certificate (EPC) rating of at least C by 2030. Looking at where our housing stock in its current state, this seems to raise a cause for concern.
We appear far off target. So much so in fact that even with several years ahead of us to prepare, some landlords may fall tragically short of the mark. In England, homes have a median EPC score of 68, according to the latest data from the ONS. In Wales, it’s 67. Both these scores are in band D.
All told, 59% of homes across England and Wales currently have a D, E, F or G rating, according to Rightmove. It also found that just under 1.7 million homes potential can’t to be improved to receive a C rating.
But whether this a permanent issue is unclear. How we assess our energy efficiency is set to be completely upended in its entirety. Hopefully, for the better.
Currently, EPC assessments are underscored by the Standard Assessment Procedure (SAP) – a system for measuring the different factors that contribute a UK homes’ energy efficiency/performance. However, after recommendations from the Climate Change Committee (CCC), the government is currently developing new methodology to boost its accuracy.
SAP 11, as the new modernised version is known, is set to better reflect our current economy and landscape. New assessment procedures should come into play from 2025, and they’re expected to better incorporate new technologies such as heat pumps, solar panels, smart meters, and more.
This is good news. While imperfect, these kinds of technologies are widespread across the UK. Around 250,000 certified heat pumps have been installed across the country. Over 1.4 million UK homes are fitted with solar panels. By mid-2024, 36.2 million smart meters and advanced meters were in homes and businesses across Great Britain.
With these kinds of technologies set to have more of an impact, a C EPC rating may soon become more attainable for many. Landlords and property investors are also likely to be encouraged to act on this too.
There are incentives to invest in a home’s green credentials, beyond simply hitting a mandatory target. Renters and buyers alike are willing to pay more for a sustainable home, even with all the other challenges afflicting the economy.
Knight Frank found that 13% of renters are willing to pay a premium for a low carbon property. Meanwhile, additional insight from the Mortgage Advice Bureau suggested 74% of prospective homebuyers consider properties with an EPC rating of an A or B as more attractive to buy. In fact, houses with ratings of A or B tend to have around £57,000 added to their value, according to Uswitch.
Given all this, refurbishment, renovation, and even conversion projects could skyrocket over the coming months; meaning specialist lenders will have their role to play in financing these plans.
We’re ready for this at Market Financial Solutions. Our permitted & light development bridging loans have been designed from the ground up to accommodate a broad range of cosmetic and structural improvements. Our funding can also be put towards the kind of upgrades that can improve an EPC rating.
And of course, our purchasing loans are there for property investors looking to buy new assets that are already primed for an eco-focused world. For landlords specifically, our BTL mortgages can also accommodate the market’s green requirements. They can allow for minor refurbishments in themselves, and we don’t insist on having a tenant in place from day one (at max 15% of current value).
Should EPC-related optimism emerge ahead of 2025, we’ll be there to facilitate action within the property investment community.
For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.