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Buy to let EPC rating guide

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 8, 2022

Buy to let EPC rating guide

To aid with the assistance of achieving net zero carbon emissions, all private properties must have an Energy Performance Certificate (EPC), with a minimum rating E, since April 2018.

To help combat carbon emissions UK government has changed the minimum energy efficiency standards (MEES) regulations for the private rental sector. They will be effective for all existing tenancies starting 1 April 2020.

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Helping Landlords and the energy efficiency of their properties

This article examines how the new laws will impact private landlords, particularly those who bought their property with a mortgage.

Private landlords with buy-to-let mortgages who need to know more about how energy efficient their property is should call us today.

Enquire to speak with one of our experienced advisors to discuss the property’s energy performance certificate or energy rating questions you may have.

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How does it affect landlords, and what is the minimum EPC rating required for a property being bought to let (BTL)?

As stated above, the minimum energy efficiency EPC rating required for a buy-to-let (BTL) property is E, unless there are exemptions (see below). A civil penalty could be imposed for any violation of this law.

Private landlords with properties with an EPC rating F or G in their portfolio will not be allowed to rent these properties to new tenants until the necessary energy efficiency improvements are made.

This applies to all business premises. However, the rules will apply to existing tenancies starting 1 April 2023.

These are just a few examples of exemptions that may be granted instead of the requirements.

  • Buildings where energy efficiency improvements would be unacceptable to alter their character or appearance (listed buildings).
  • Buildings that are planned for less than two years
  • For less than four months, buildings are not intended to be used.
  • A stand-alone building with a floor area of less than fifty square metres
  • Holiday lets
  • Tenancies in agriculture (more than 2 acres)
  • Asylum seekers in accommodation

Landlords may also request a five-year exemption if they can or unwillingly complete work.

New landlords may apply for a six-month temporary exemption to allow the rental properties to be finished. All exemptions must be noted on the PRS exemption registry.

To learn more about how recent changes to minimum property’s energy efficiency standards for rental properties may impact you, get in touch, and we will arrange to speak to a specialist who deals with the EPC ratings for the UK government.

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What will the impact of these changes on EPC ratings on a buy-to-let (BTL) mortgage

These changes will not affect all landlords who bought a property with a buy-to-let (BTL) mortgage. Most properties built in the past twenty years would meet the minimum energy efficiency standards.

Lenders will request a copy of the most recent EPC rating if you apply for a BTL mortgage. Your mortgage application will likely be rejected if the rating is below E. If this happens, the lender will require you to obtain an EPC rating of E or higher before they approve your loan.

Is it possible for an EPC rating lower than the minimum standard to affect the property’s value?

Yes. Any mortgage company will reflect the value of a rental property that has a substandard EPC rating.

In light of the new regulations, you must have an EPC rating of E or higher before selling or refinancing your property.

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What options do I have if my property isn’t up to these minimum standards?

You have the option to make energy efficiency EPC improvements if your property doesn’t meet these minimum standards. Enquire today to discuss the property improvements required for energy-efficient homes.

You may be eligible for a five-year exemption if your property has an EPC rating lower than E. This applies if you have incurred more than a certain amount.

The cost of obtaining an EPC rating of E (or higher) often would not be as high as it seems. Because the average EPC rating in the UK stands at an EPC rating of C or D, the costs of moving from a rating of F or G to E are usually not so high.

You can also apply for a Green Deal financing loan designed to improve UK homes’ energy efficiency.

Get in touch to learn more about the providers that offer this type of financing. We can help you locate the right mortgage lender for you.

Our experts are all whole-of-market mortgage brokers who have access to every lender in the UK.

Talk to a mortgage expert for buy-to-let & the minimum EPC rating

It is essential to make further improvements to the property and meet the minimum EPC rating standards. This could impact your ability to remortgage existing finance.

Our advisors can provide the mortgage advice and expert knowledge you require, customised to your individual circumstances. We can make you aware of the costs involved in making your property more energy efficient.

To get started, contact us today or submit an enquiry online.

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