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Green mortgages and broker liability

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 19. May 2022

Looking to speak to mortgage professionals about green mortgages and liability. 

Concerns have been raised around role of broker and lenders in offering five-year fixed rates to landlords in light of potential EPC legislation changes. The proposed deadline for existing tenancies is 2025, with new tenancies and residential expected to follow. 

  1. What will the role of the broker and lender be in offering advice/products to meet these targets? Where does the liability lie?
  2. What can be done to mitigate uncertainty/blurred lines?
  3. What consequences might this have for the mortgage sector?

4 responses from the Newspage community

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Editor
Rob Peters
Principal at Simple Fast Mortgage
If the property currently qualifies for a green mortgage they will be meeting the future EPC legislation changes now, so 'no issue'. If the client does not qualify for a green mortgage now, but elects to go onto a 5 year fixed rate mortgage, the requirement to ensure their property confirms to relevant legislation in 2025 will come into play at that time. The current fixed rate should not be a blocker to any minor remedial work required later.
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Editor
Imran Hussain
Director at Harmony Financial Services
"The liability lies solely with the owner of the property but as advisors we should be using our channels of communication to inform clients and the general public around these change. With over 4 million properties in the PRS sector, with the vast majority likely to be affected, the question is where does the money come from for any required improvements? It will almost certainly lead to higher rents unless there is a government subsidy or grants are made available to those in the PRS sector. What landlords can be doing now is ensuring there is scope for properties in their portfolio to achieve a C rating and get estimations on the cost of works required. The effect it will have on the mortgage market is anyone currently on a green mortgage product will remain unaffected but could there be a problem for those whose properties can’t ever get higher than a D rating. Will lenders just refuse to lend as no lender has come forward and said anything yet and until they do nobody knows what the future holds for the market."
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
"Too many landlords and brokers are burying their heads. 4.1 million rented properties are in scope, 3.4 million are rated D or below. That's a huge amount of landlords in very hot water with a mortgage to pay on a property they can't rent out with average costs to do the necessary property improvements at over £8000. You have a recipe for total disaster brewing and landlords caught in the trap will look for someone to blame. That's why at Peak we already recommend that all our investors run potential properties past a company that does a free EPC check and provides an estimated cost of works to bring it up to standard. Quite simply it's the right thing to do in order to look after clients who we want on our books for the next 25-30 years."
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"It is the landlord's responsibility to ensure they meet any EPC requirements. Having a fixed rate mortgage should not impact on this. If they need to improve the energy efficiency of their properties, they must do this much the same as they do with any other ongoing maintenance and repairs."