Lenders already restricting mortgages on properties that don’t meet 2028 EPC minimum standards: 'Landlords could be forced to sell'

LENDERS are already restricting mortgages on properties that don’t meet 2028 EPC minimum standards with experts warning “landlords could be forced to sell”.

The Government is proposing that, from 2028, all new buy-to-let tenancies will require a minimum EPC rating of C - and all rental properties by 2030. 

Landlords could face fines of up to £30,000 for non-compliance, with upgrade costs potentially running to £6,000 - £15,000 per property.

Yet despite the timeline, financial experts said there is evidence that some lenders are already tightening lending on properties that fall below EPC C today.

Craig Fish, Director at Lodestone, said brokers and landlords are being left frustrated by the “stealth approach”.

He added: "Lenders do need to be cautious, a mortgage is a long-term debt and future EPC standards will affect both the value and mortgageability of a property. But taking a stealth approach, quietly restricting lending without clear explanation, is likely to frustrate both brokers and landlords. 

"Landlords need time to plan and budget because this is a costly exercise, and pushing too soon could force some out of the market. If that happens, we may see a flood of properties for sale and a softening of house prices in some areas. 

“Tenants stand to benefit from warmer, cheaper-to-run homes, but the flipside is that landlords will naturally try to recover upgrade costs through higher rents, adding to the affordability pressures renters already face.”

Justin Moy, Managing Director at EHF Mortgages, said landlords with older properties could be “forced to sell”.

He continued: "We are seeing a shift by lenders promoting 'Green' Buy to Let mortgage products, with a number offering reduced fees, free EPCs and lower rates to encourage landlords to improve the efficiency of their properties.

"However, there are plenty of older properties that will struggle to capture a rating of 'C' irrespective of the money spent on improvements, and the Government needs to look at how the EPCs represent those types of properties, and whether the exemption route needs to be more forgiving to avoid a catastrophe of social housing issues in a few years' time. 

“We could have landlords forced to sell, but unable to match with buyers who are also bound by the same regulation.”

Ben Perks, Managing Director at Orchard Financial Advisers, pointed out that it was responsible lending.

He said: “Three years isn’t that far off, and if you’re purchasing a property it’s only right that the lender ensures you’re able to keep it in the not too distant future, especially if you take a 3 or 5 year fixed rate. It does seem OTT, but it is responsible lending and people would be quick to berate the lender if they had trouble refinancing a property in the near future.”

Rob Peters, Principal at Simple Fast Mortgage, said landlords “deserve clarity and consistency".

He added: "Lenders tightening EPC criteria early was always going to happen, it’s just the market front-running legislation as mortgages are long-term contracts. But landlords deserve clarity and consistency. 

“This creeping policy-by-stealth creates confusion and panic selling. The government needs to step in with clear retrofit support and incentives to help landlords future-proof, otherwise, we’ll see regional disparities, rising rents, and a shrinking private rental sector, which ultimately hurts tenants the most.”

Kundan Bhaduri, Entrepreneur at The Kushman Group, said “lenders are quietly tightening the noose on landlords well ahead of the 2028 EPC deadline”.

He added: "I’ve now seen multiple cases where mortgage deals on perfectly legal, tenanted properties are being refused or penalised simply for having a D or E rating. The regulation may be years off, but banks are already acting like it’s law. 

"Retrofitting a Victorian terrace to EPC C can cost £10,000–£15,000—more in rural areas where heat pumps are useless and insulation options limited. Many landlords, especially in the North where older stock dominates, are locked out of finance. This creates a chilling effect: fewer rental homes, rising rents, and yet another blow to an already strangled sector. 

“Meanwhile, net zero targets are being handed to landlords without the incentives or infrastructure to meet them. Consequently tenants face higher costs and less choice, while lenders rewrite the rulebook early, offloading risk onto landlords. This isn’t green progress, it is policy drift and financial censorship.”

Michelle Lawson, Director at Lawson Financial, said the costs will just be passed on to tenants.

She added: "Certainty for landlords around the EPCs are much needed as this has been white noise for such a long time now. Lenders will always act with caution especially those of particularly low grading. 

“Many properties will simply not meet the C rating which will further reduce perfectly suitable housing stock in the hot pursuit of energy efficiency. The costs will just further get passed on to the tenant via higher rents and make rental properties in some areas like hens teeth. The continued dessimation of this sector is penalising the very people it should be helping.”

Pete Mugleston, Mortgage Advisor & Managing Director at Online Mortgage Advisor, said there could be a “short-term fallout” from the new rules.

He continued: "Some lenders are starting to tighten their criteria around EPC charges, with many promoting 'Green' products instead. Tightening the criteria three years before the 2028 deadline will squeeze landlords, especially smaller investors without deep pockets to fund upgrades. 

"Those regional areas with older housing stock could be disproportionately affected, which might depress values on D or E-rated homes. Greener housing is important in a warming world and a long-term goal everyone can get behind. 

“But the short-term fallout could be fewer rental properties, rising rents, and reduced choice for tenants, especially where affordability is already under pressure.”

Scott Taylor-Barr, Principal Adviser at Barnsdale Financial Management, also commented: "This isn't a massive surprise. If you are entering into a 20+ year mortgage, based on you receiving rental income to pay that mortgage commitment, it makes sense that lenders look at current and future risks to that scenario; and a change in the legal framework would be one such risk. 

"No lender wants to be caught in a situation where a landlord can no longer afford their mortgage, as they can't legally let the property, because they all know that the blame for agreeing to the loan in the first place, and any redress costs, will fall on them, rightly or wrongly, as the party with the deepest pockets. 

“I think it's more of a surprise when I hear of lenders that aren’t looking at the EPC changes as a risk to any potential loans. But this also offers an opportunity for lenders, who can launch products for properties which do not meet the current requirements, that specifically look at the work needed and fund the works needed to get the property to the required standard.”