By April 2025, any property being let to a new tenant must have an Energy Performance Certificate (EPC) rating of C or higher, jumping significantly from the current minimum score of E.
Certainly, with residential property contributing 40% of the UK’s carbon emissions, it is no surprise to see the government increasing regulation in the sector in line with its net-zero targets.
However, the Association of Residential Letting Agents argues that affluent landlords will benefit at the expense of their less well-off counterparts under the new regulations.
Known as ‘eco-privilege’, landlords who can pay for the renovations upfront will be able to access cashback schemes and favourable mortgage rates as a reward for making eco-upgrades.
Consequently, those who cannot afford to make the changes will miss out on ‘green’ finance schemes, leaving them with less favourable financial options. Worse still, some may have to sell their properties if they cannot afford to renovate.
The bridging sector can help combat eco privilege and it is important that lenders, brokers and landlords collaborate to create a more sustainable property market.
Whether capital is needed to buy and renovate a property at auction, or to free up capital tied up within the existing portfolio to make the upgrades, bridging loans can give landlords the time and money to afford refurbishments and source a long-term financial solution. Thus, a wider variety of landlords will be empowered to access ‘green’ finance.
Indeed, as 82% of buyers say they would pay more for an energy efficient home, and 42% of renters say they consider the property’s climatic impact before renting, it is clear that all landlords could improve marketability alongside sustainability.
As such, it is down to lenders to work closely with all landlords to educate them on how they can adapt to new regulations, ensuring no one is left behind unnecessarily. Landlords, meanwhile, should create a clear plan for what renovations they will undertake, when, and how they will finance them. Certainly, those who do so successfully will be contributing to a fairer, more profitable and more sustainable property market.
Paresh Raja is the founder & chief executive officer of Market Financial Solutions