Shawbrook is giving new buy-to-let (BTL) mortgage customers an energy efficiency discount, or a partial refund of up to 60 basis points (bps) on their arrangement fee, if they can show their property’s energy performance certificate (EPC) rating is a C or higher.
The lender says that a customer on a £250,000 mortgage could save up to £1,500 on their arrangement fee with this change.
For new mortgages on properties where the EPC rating improves to at least a ‘C’ during the mortgage term, customers can apply for a partial refund of their arrangement fee, plus the cost of the new certificate up to £100.
Those with lower ratings can use Shawbrook’s unregulated bridging products to improve energy efficiency before transitioning to a buy-to-let mortgage and get the discount.
The lender has made the move ahead of current proposals from the UK government, which should require rental properties to have a rating of C or above, starting with all new tenancies from 2025 then all tenancies from 2028.
The median EPC rating for a residential property in England and Wales is currently a D, with properties only required to be above an E to be let.
Research conducted by Shawbrook as part of its Confronting the EPC Challenge whitepaper, earlier in the year, found that close to a quarter, 23 per cent, of landlords said their properties are currently rated D or below for energy efficiency.
In terms of income, landlords believed they could lose up to £9,500 a year in missed rental payments if they are unable to make changes ahead of the 2025 deadline. Landlords are currently expecting the improvements to cost in the region of £5,900 on average.
Emma Cox (pictured), managing director of real estate at Shawbrook, said: “We are committed to helping landlords and to a greener future. This product enhancement incentivises landlords and rewards customers with a high energy efficiency rated property.
“By being proactive, landlords will be in a strong position and one step ahead of the upcoming changes.
“From our research we have been able to understand how significant these policy changes could be for the market. We’ve listened to landlords and brokers to identify what is needed and where we can make a difference. This enhancement is the first in a long line of developments and innovations we will be making to support landlords.”