With Rightmove’s latest data highlighting a rebound in demand for London as people return to offices to work and move closer to major cities, or at least within comfortable commuting distance of their workplaces – there’s lots of opportunities for London landlords and sellers.
However, with the new government rules surrounding EPC ratings due to come into effect in just three years, and 60% of the UK’s current housing stock still rated D or below – the scale of the challenge is clear. Making these necessary changes to rental properties can be disruptive and costly to landlords and sellers alike – particularly as research estimates average upgrade costs range from £6,000 to £10,000.
Sundeep Patel, Director of Sales at Together – the specialist lender- commented: “The proposed Minimum Energy Standards for rented properties will shift from an E rating to a C rating under the new rules, and making changes isn’t optional. The new regulations will be introduced for new tenancies first from 2025, followed by all tenancies from 2028.
If your property is found to fall short of the required rating, you could face a fine of up to £30,000. Plus, you’ll have an unlettable property on your hands, which is not only a waste of essential residential resource, but also means you’ll incur a loss of rental income.”
Whether you’re looking to do some general upgrades and roll the cost of energy efficiency measures into the cost or need to do a whole raft of improvements just to bring your property up to scratch, short term funding like a bridging loan or a longer-term arrangement such as a second charge loan could prove a good choice.
Securing a bridging loan against your rental property, or another property in your portfolio, could allow you to make the investment necessary – if you’ll need less than 12 months to complete the required work. After you’ve made the improvements, and potentially increased the value of your property, you could refinance onto a new buy-to-let mortgage.
Alternatively, if you’ve got a great deal on your current mortgage and you don’t want to refinance, or if you want to make improvements over a longer period of time, a second charge loan could be more suitable. The second charge mortgage will run alongside, but independent of your current one – so if you want it to end sooner your existing buy-to-let mortgage, it can. In fact, you can borrow over as little as four years.”
Here, Sundeep Patel, Director of Sales at Together shares a few ways people can start to prepare for the eco-changes now:
- Switch to LED lighting throughout
- Make sure the walls and roof are properly insulated
- Install a new energy efficient boiler
- Replace old windows with double or triple glazing
- Choose an energy supplier that gives you a smart meter
- If you’re really committed to sustainable energy and are willing to do more structural work on your property, you could even think about solar panels or ground source heating
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