Landlords have been warned within the government’s Heatings and Buildings Strategy that they face having to pay higher mortgage premiums if they buy or remortgage properties that do not meet minimum EPC standards.
The proposals are part of, and run alongside, the government’s plans to make Britain ‘net zero’ by 2050.
But despite 17 million out of the nation’s 29 million homes being EPC band D or below, the government expects the scheme to be voluntary and market-based at first, using the lure of lower interest rates offered by lenders to persuade landlords and home-owners to upgrade their properties.
The scheme will have to be ambitious to succeed – the government estimates the cost of upgrading these 17 million homes to be up to £65 billion.
But if the green mortgage scheme is not successful and housing stock upgrade targets are not met then the government is proposing to make it mandatory for lenders to have all properties within their managed portfolios reach EPC Band C by 2030.
The lending market is at least beginning to respond – some lenders now have ‘green mortgages’ which offer lower interest rates for eco homes But progress has been slow.
Effectiveness
“While green mortgages are potentially a good way of encouraging the implementation of energy efficiency measures, the current low mortgage interest rates in the market are likely to reduce their effectiveness in this regard,” says a spokesperson for the National Residential Landlords Association.
“The Government’s English Housing Survey confirms that the private rented sector has the highest proportion of older dwellings of all tenures, with 32% built pre-1919.
“The cost of upgrading these properties to the highest energy efficiency ratings is significant, and the savings of a green mortgage are unlikely to be sufficient to cover this.
“What is needed in the future is a more strategic approach which recognises the specific challenges facing many landlords in the private rented sector is needed.”
The strategy document also proposes to prevent new-build homes from connecting to the gas grid in England from 2025.
A recently-closed consultation on requiring all rented properties to meet a minimum EPC band C by 2030, with an announcement expected later this year.
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