One of the many incentives for investing in an energy efficient property is the rise in the number of green mortgage offers that cater for the space.
The green mortgage market has certainly taken off in recent years as the UK has become increasingly aware of the importance of being as energy efficient as possible in our daily lives – and particularly in the homes we buy and live in.
Essentially, ‘green mortgages’ are something lenders offer for properties with the highest energy performance certificate (EPC) ratings. They come with a range of incentives, from cashback offers to more favourable rates for the most energy efficient homes.
In the buy-to-let space, while the number of green products isn’t quite as high, more and more lenders are now offering a greater range of options. This means buy-to-let landlords and property investors can increasingly save money through their mortgage products, making new-builds and energy efficient homes even more appealing.
Which lenders offer incentives?
Barclays, Paragon Bank, Mortgages for Business and Leeds Building Society are some of the UK lenders that offer green mortgage incentives and products for buy-to-let properties.
Another specialist lender, Landbay, has recently refreshed its range of buy-to-let green mortgage products, reintroducing a five-year fixed rate option and also reducing its rates on some of its deals, with two new products as well.
Buy-to-let properties with EPC ratings of A, B or C can take advantage of the green buy-to-let offers. Landbay’s green rates are now 0.10% lower than its standard five-year product, and it includes five options at an LTV (loan to value) of 75%, with rates starting at 4.69%, with a 5% fee.
One of the new products it has added to its range is a two-year fixed rate for houses in multiple occupation (HMOs) and multi-unit freehold properties (MUFPs).
Commenting on the latest changes which will benefit energy efficient property owners, Rob Stanton, business development director at Landbay, said: “We want to encourage landlords to upgrade property to at least a C rating in preparation for forthcoming legislation and to make homes more energy efficient.”
“Our product development team has also been busy designing new products and reducing rates on existing ones giving our intermediary partners and their landlord clients more choice.”
Invest in energy efficient properties
Today’s new-build homes are the most energy efficient in the UK, with a raft of new rules and minimum standards now in place for builders to ensure that the built environment produces fewer carbon emissions. The majority of new-builds under construction will achieve A or B ratings.
In the UK rental sector, there are proposals currently being considered in parliament that would increase the minimum EPC ratings required for buy-to-let properties to operate. This could mean rental homes must achieve a rating of D, or possibly C, by 2025 for new tenancies as 2028 for existing ones.
In this way, investing in an energy efficient property could be a good way of future-proofing your asset if you wish to let it out in the private rented sector. It means that when new laws come in, you won’t need to carry out any additional work for it to achieve the required rating.
What’s more, as standards improve in the rental sector, and more new homes come to market offering top green credentials with lower energy bills, tenants will be increasingly drawn to greener homes. This will make them a huge selling point, compared to older homes that are more expensive to run.
At BuyAssociation, we specialise in sourcing off-plan new-build properties with the highest energy efficiency ratings for property investors. Get in touch to find out more or browse some of our investment opportunities.
