Buy-to-let landlords could struggle to get a mortgage without the correct EPC rating.
From April 1st 2018, it will be illegal for landlords in England and Wales to renew a tenancy or agree a new one without having an EPC rating of at least an ‘E’ or above.
In addition, UK buy-to-let landlords may struggle to get a buy to let mortgage /remortgage if they don't have the correct Energy Performance Certificate rating for the property.
In future, when applying for a buy to let deal, landlords will be expected to provide evidence of a valid EPC showing a suitable rating. Failure to comply may result in mortgage refusal. It is also likely that a clause about keeping the EPC valid and compliant will be written into standard buy to let mortgage contract terms and conditions.
What is an EPC?
EPC stands for Energy Performance Certificate and provides information for both landlord and tenant about the typical costs involved in heating and lighting a given property. It also covers what the carbon dioxide emissions are likely to be. The information is combined and an overall rating is given from A (very efficient use of energy) to G (very inefficient use). Once issued, an EPC rating is valid for a period of 10 years.
When is an EPC required?
An EPC is required for when a property is:
A valid certificate must be provided for prospective buyers or tenants to see before the property is marketed as available. In Scotland, the EPC must be displayed within the property.
How will the change affect you, the landlord?
If you are planning on issuing a new private rental agreement from 1st April this year onwards or will be renewing the tenancy of an existing tenant, you must have a valid EPC. The change in the law makes it compulsory for your properties to have an efficiency rating of ‘E’ or better.
The survey indicates how energy efficient your rental property is, but it also includes ways of making improvements that will increase your rating and save money. Be aware that if the rating given is an ‘F’ or a ‘G’, you will be breaking the law of you do not implement the improvements highlighted. Failure to obtain a valid EPC could lead to the following consequences:
- You would be personally liable for a fine of up to £4,000.
- You will be unable to rent out your property.
- You will be unable to secure financing for purchase or remortgage of a property.
Depending on your circumstances, financial assistance could be available to help you make the necessary changes described in the survey.
How do you obtain an EPC?
To obtain an EPC, an energy survey needs to be completed on the property by an approved Domestic Energy Assessor. To search for an approved assessor in your area, click HERE.
Further information on EPCs and how they may impact your rental position is available from our expert buy to let mortgage and remortgage advisors at Deal Direct.