Energy Efficiency – Financing options for retrofitting…

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As part of the UK’s drive to be net zero by 2050, homeowners are facing costly green renovations.


Already, owners are required to provide energy performance certificates with a minimum rating of E for all of their residential properties. However, with the government insisting that all rental properties have an EPC rating of C and above by 2025, rising to B by 2030, the pressure is on for landlords.


EPCs are useful for identifying energy efficiency improvements that can be made to improve a property’s rating, including measures such as installing wall insulation and installing smart technology. However, renters looking to live more sustainable lives want more – rental properties with electric vehicle charging stations, energy-efficient appliances and water-saving gadgets.


While the government’s intentions are well-meaning, there is very little financial support to help homeowners fund these green updates. For example, the average cost of installing an electric vehicle charging point in a residential property is £1,000, of which up to £350 can be claimed as a grant from the government’s Electric Vehicle Homecharge Scheme.


But when it comes to major works such as wall and floor insulation, costs can run into the tens of £1,000 per property.


Since homeowners are legally required to update their properties in accordance with EPC rating targets, they have little choice but to find the money or sell. A survey by The Mortgage Works found that 52% of affected homeowners have considered selling all or part of their properties because they don’t believe they will be able to complete or finance the work needed to upgrade their properties. Standard.


Fortunately, there are options available.


Remortgage to free up equity or get a lower rate


If you are a homeowner with a portfolio of mortgage-free properties, you can remortgage to release the equity in one or more of your properties. This can be used to pay for improvements to your residential properties.


If you have an existing mortgage on one or more of your properties and it is about to be renewed, or if you have a mortgage rate that is not as competitive as it could be, you may remortgage to another product with a cheaper rate, saving you money on your monthly repayments and freeing up funds.


Often the property is your greatest asset, so it can make sense to use it as collateral to secure additional financing through a new mortgage. Private banks and building societies are more likely to offer their most favorable rates and terms if you have property to secure your loan.


Lenders will want to know that you can afford your monthly repayments and it’s important to be realistic about valuing your properties – some estate agents may give you a higher valuation than your mortgage lender. Also, if your current mortgage is about to be renewed, be sure to shop around for a new deal and don’t fall into the trap of switching to your existing lender’s standard variable rate which will undoubtedly be more expensive and could cost you money. .

Real estate development incentives


Many lenders offer incentives to property owners who develop new builds, partial builds, and full renovations to an A/B EPC standard.


If you are a landlord with properties that need a lot of work, then it may be worth considering borrowing a large cash injection, either through a new mortgage or mortgage, for thorough work to bring your properties to an A/B level. Standard. It might be more cost effective in the long run to do this, rather than spending money in the interim to reach a C standard for you, then having to borrow more money at a later date to reach the government objective of an A/B.


Some lenders, such as Paragon Bank, offer a range of loans specifically designed to provide owners with additional financing to renovate their properties and other incentives with favorable buy-to-let mortgages for those who own properties that hold a dimension A – C EPC.


Others, like Lloyds Bank, have programs such as the Lloyds Clean Growth Finance Initiative which offers arrangement fees and reduced loan rates for green investments and capital expenditure. All loans are subject to meeting or not meeting loan eligibility criteria.


When looking to obtain any type of loan, please first contact a specialist broker who can negotiate the terms and rates to suit your personal situation, and who can also help you determine whether the investment is financially advantageous to long term. term.


* Charles Ayton is Senior Commercial Director at largemortgageloans.com *



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