As new-builds tend to have the highest EPC ratings, these properties can allow investors to secure better mortgage deals through green finance.
Recently, there has been an increase of lenders offering new buy-to-let mortgages aimed exclusively at landlords with good EPC ratings, giving them favourable rates. This is providing additional mortgage products and better deals for landlords with property investments that boast the highest energy efficiency ratings.
Green mortgages allow lenders to reward those who have purchased energy efficient homes. Properties usually need to achieve an EPC rating of A or B, but sometimes even C, to benefit from these better rates.
The savings from green finance will be particularly welcomed by property investors, especially as interest rates have increased over the past year. So, this can provide an avenue for savings. But over the past couple of months, fixed mortgage rates have been dropping across the board, providing investors with more competitive options than before.
What’s causing lenders to offer green savings?
One of the catalysts for the rise of green mortgages is the government’s proposed requirement for all newly rented properties to have an EPC rating of C or above by 2025. These changes would be phased in with all existing tenancies potentially needing to meet this minimum requirement by 2028.
Presently, all properties in the private rented sector are required to achieve a minimum EPC rating of E in order to legally let a property out. This already rules out many existing older properties. So, lenders may view investors buying energy efficient homes whilst having a degree of future proofing.
These changes to the minimum energy efficiency standards are being considered to help the government meet its goal of achieving net-zero by 2050. Chancellor Jeremy Hunt has also vowed to put measures in place to reduce the country’s energy consumption by 15% by 2023.
Additionally, Prime Minister Rishi Sunak recently announced a shake-up of government departments, and this will include the creation of the Department for Energy Security and Net-Zero. Many are hoping this will mean better decision-making on energy efficiency requirements for homes and provide more clarity for the private rented sector.
The benefits of energy efficient new-builds
With all of this at play, new-builds provide a number of benefits for property investors. Even though they can come with an initial higher cost, those who are investing with the long-term in mind, there are numerous advantages.
New-builds tend to be less energy-intensive as they’re built with modern materials to the latest energy standards. This means energy bills are generally cheaper, which is increasingly attractive to tenants, who are more aware of these costs than ever. So, this could increase demand for your property.
Purchasing a brand-new property also means investors typically won’t have to spend much on maintenance and repairs in the coming years, aside from just general wear and tear from your tenants.
Buying off-plan also provides additional incentives, including a cheaper price, helping investors secure maximum gains when investing in new, energy efficient properties.
A more future proof investment
Landlords looking to invest in more future-proof and energy efficient properties might find new-builds are the best choice for them. By doing this, investors can save themselves the headache of having to upgrade older properties to improve their EPC ratings in the years to come.
If you’re interested in investing in a new-build or off-plan property or want to know more about the investment opportunities we have available, get in touch with our team today by calling 01625 725 779, or email us at contact@theprestburyadvisory.com.
