Mortgage Advise From Macbeths - Buy To Let Insurance

New EPC Regulations are no April Fools’ !

Some of you may be aware of the new energy performance certificate (EPC) regulations that came into effect on the 1st of April and no, we’re not aware of it being some elaborate hoax!

Landlords who rent out properties in the private rented sector will need to ensure that those properties have a minimum energy performance rating of E on an energy performance certificate (EPC). The new EPC regulations come into effect now for all new lets and renewals and in 2020 for all existing tenancies. A landlord will be breaking the law should a property falling below a rating of E be rented out. Energy efficiency improvements will need to be carried out in order to increase the EPC rating to at least an E before the property can be rented out. Typically properties built in the last 20 years are likely to meet the required energy efficiency standards. Problems are more likely to occur with older properties.

For more information on the new EPC regulations and how they will affect you as a landlord, take a look at the Residential Landlords Association website.

As a specialist mortgage broker, we are seeing more and more lenders updating their buy-to-let lending criteria. Foundation Home Loans offer a wide range of Buy-to-Let mortgages and are particularly experienced in the portfolio landlord market. They have announced that they have updated their buy-to-let criteria in response to the new EPC regulations. As of the 1st of April, properties registered with Foundation Home Loans must meet the minimum EPC regulations standard, a rating between A and E. If they do not meet the minimum requirement, they need to make improvements and obtain another rating. More generally, as this will be a legal requirement, lenders are not expected to provide mortgage finance for buy-to-let properties without the required EPC. However, of the 10 buy-to-let lenders contacted by Mortgage Strategy, only three were able give clear details about their policy regarding this regulatory change.

Accord, a subsidiary of Yorkshire Building Society, is one of only a few lenders to have updated their lending requirement and has required an EPC of E or above since November 2017. Accord’s commercial manager, Chris Maggs, did not anticipate the change in regulations causing widespread problems for mortgage brokers or landlords, as only a small percentage of properties will be impacted by the new energy efficiency rules.

The new legal EPC regulation also applies to rented commercial buildings. The government estimates that 18% of commercial properties hold the lowest EPC ratings of F or G, so there is work to do!

The insurance ramifications of the new EPC regulations may also be significant, but currently, we are not experiencing any questions from our insurers regarding EPC ratings. If a property is in effect being rented out illegally, by not meeting the new EPC requirements, the insurance cover on that property could be adversely effected. Unoccupied buildings would still require cover of course.

If you have any questions about buy-to-let mortgages and the potential impact of the new EPC regulations, feel free to give me, Brian Mooney, a call on my direct dial; 0118 923 5097.

Author: Rachael Clover | April 4th, 2018

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Rachael Clover
Get in touch:   Reading: 0118 916 5480   London: 020 7036 8767