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Loans to Improve the EPC Ratings for Rental Properties

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A minimum Energy Performance Certificate (EPC) rating for rental properties is being proposed by the Government; the proposal is to state that any rental property let on new tenancy agreements, must achieve a minimum EPC rating of C by April 2025.

The minimum EPC rating for rental properties will then extend to all residential tenancies by April 2028.

Under the current rules, there is a spending cap of £3,500 on the works to upgrade a property’s EPC up to the required rating of an E.

If a landlord can evidence that the cost to complete the required upgrades equates to more than £3,500, the landlord can apply for a “High-cost exemption” which lasts for 5 years.

However, the proposed changes to EPC ratings for rental properties could see this cap raised to £10,000. This would require landlords to spend significantly more to improve their property to achieve the required minimum EPC rating.

While it is not currently legislation, this proposed date is fast approaching and with potentially expensive works required to bring properties up to the minimum EPC rating standard; are there loans available for landlords?

Bridging loans to improve EPC ratings for rental properties

While landlords may not currently have the funds to hand to complete the required works to improve their property to the minimum EPC rating, there are loans available.

Bridging loans could provide landlords with the quick cash injection they need to complete the works to improve the property’s EPC.

The benefit of bridging loans is speed and flexibility. Bridging loans can complete in a matter of weeks rather than months, and as such landlords can utilise this time to complete the required work to bring their property up to the minimum EPC rating.

Although you may take out a bridging loan for a 12-month term, there are no early repayment charges, so once the improvements have been made you can refinance without paying any penalties.

Therefore, once the works are completed, you can refinance onto a buy-to-let mortgage and potentially capital raise additional funds if the property has increased in value through the works completed.

Are there benefits once a property achieves the minimum EPC rating?

Once a property achieves an EPC rating of A-C, there are numerous benefits.

Alongside the obvious increase in the energy efficiency of the property, which benefits the tenants on their energy bills; the landlord can also benefit.

There are several buy-to-let lenders who are offering incentives to landlords who have properties of an EPC A-C rating.

These can include discounts to the interest rate and in some cases, lenders are offering discounts of up to 0.60% on their arrangement fee.

Therefore, increasing to the minimum EPC rating or above for your rental property could offer real savings in the long run.

How can Advocate Finance help?

Our qualified, experienced advisers here at Advocate Finance, are experts in arranging bridging loans.

Thanks to our wide panel of trusted bridging lenders, we have lenders who can complete in a matter of weeks, meaning you can make those vital improvements to achieve the minimum EPC rating quicker.

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We provide a FREE assessment on all our services.

Please contact us directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.

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