Interest in green mortgages rises as lenders launch new buy-to-let deals


New research shows interest from buy-to-let landlords for green mortgages has increased sixfold. As interest grows, more lenders are launching deals for energy efficient properties.

More landlords are becoming interested in green buy-to-let mortgages. A survey by buy-to-let broker Mortgages for Business reveals 62% of landlords say they are interested in mortgages that reward borrowers with better rates for making their properties more energy efficient. This equates to three in every five landlords.

The poll surveyed more than 300 landlords across the UK and shows attitudes have changed in the past decade. Many are seeing the importance of investing in green properties. And landlords are welcoming the benefits of lower rates when investing in energy efficient properties.

Jeni Browne, director of Mortgages for Business, says: “Improving the energy efficiency of the UK’s stock of housing is a priority in the fight against climate change. A green mortgage means that, once they can confirm they have a revised energy rating for their property, the right lender will recalculate their mortgage rate at a discount.

“There are various mortgage products out there but the best are applied on completion of an energy efficiency project and applied for the lifetime of a mortgage.”

Green mortgages for buy-to-lets

A number of new green mortgage offerings for buy-to-let landlords has recently come to the market. Green mortgages give borrowers special rates linked directly to the energy performance of their properties.

Paragon Bank has launched an 80% loan-to-value buy-to-let range for properties with Energy Performance Certificate (EPC) ratings between A and C. Additionally, Keystone Property Finance has launched a range of products for landlords who make their properties more energy efficient. Landlords can secure a 0.15% reduction to their core ranges on properties five years or older with an EPC rating between A and C.

This rise in green buy-to-let mortgage deals could incentivise more landlords to purchase properties that are energy efficient or make green improvements to their existing properties. Green mortgages will also likely become a bigger part of the finance sector in the coming years.

More properties with higher EPC ratings

The number of buy-to-lets with higher EPC ratings has increased dramatically. Currently, all privately rented residential properties need to achieve grade E or higher in their EPCs. From 2025, every rental property will need to have an EPC of C or above. This will further improve the energy efficiency of properties in the the private rented sector.

Additionally, the number of new-build homes with higher EPCs is on the rise. In the last quarter, 84% of new homes in England have an energy rating of A or B. This is up from 79% in the previous quarter.

Housing Secretary Robert Jenrick explains: “Building back greener and delivering quality energy efficient homes is a priority for this government and these figures highlight our commitment to helping people keep household bills low for people, while looking towards a more sustainable future.”

The government has a commitment of making Britain carbon-neutral by 2050. Upgrading existing housing stock with energy efficient improvements and making new-builds even more green can lower the sector’s carbon emissions.

The benefits of investing in energy efficient properties

With the world becoming increasingly eco-conscious, more landlords are investing in energy efficient properties. In the UK, the most energy efficient properties tend to be new-builds. Higher green standards are being introduced for new-builds to make new properties even more green. This will lower energy consumption and reduce bills.

Jason Tema, director of Clearview Developments, comments: “As forward-thinking developers, we ensure that our homes meet the latest standards and incorporate materials as well as building techniques that contribute to a good EPC rating. There’s an ever-growing demand for energy efficient homes across the UK and, with this, there will be a new wave of buyers who are looking for specific mortgage offerings.”

While new-builds are sometimes more expensive at the outset, living costs can be substantially cheaper. This is especially relevant to property investors buying properties for rental. Green properties can be a huge selling point for tenants. There are also a number of other benefits of buying a new-build for both homeowners and property investors.

BuyAssociation has a number of property investment opportunities, including newly converted properties and new-builds. To find out more, get in touch.

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Interest in green mortgages rises as lenders launch new buy-to-let deals


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