Wednesday, November 30 2022

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Haydn Thomas, Chief Commercial Officer of Cornerstone Commercial Finance, says the UK government’s Net Zero strategy has set out policies to achieve their carbon neutral targets which are expected to come into effect within the next few years.

How can national private rental property owners plan for upcoming changes to government EPC regulations?

The UK government’s Net Zero strategy has set out policies to achieve its carbon neutrality targets which are due to come into effect in the next few years. One of these policies will focus on improving the energy efficiency of housing, with a particular focus on domestic rental properties in England and Wales. The proposed changes will increase the Minimum Energy Efficiency Standard (MEES) and by 2025 landlords will be required to have a valid EPC rating of C or better on their properties for all new rentals. This will then apply to all existing rentals by 2028.

Currently, the requirements for all buy-to-let properties are an EPC rating of E or better. This jump from E to C could come at a significant cost to homeowners with needed home improvements estimated to cost an average of £10,500 according to a recent survey by Paragon.

This is not a problem limited to the minority as according to Rightmove 59% of households have a D rating or less with 11% – almost 1.7million households in England and Wales – unlikely to ‘they can never get a C rating even with energy saving upgrades. With the penalties for not having a valid EPC being increased to £30,000, this is not something that should be pushed onto an owner’s mind. Preparing for these changes is essential and here at Cornerstone Finance, we want to help you plan for these fast approaching deadlines.

How to improve the energy efficiency of a property

Before you can improve the energy efficiency of your property, you need to know its current energy efficiency. You can find your EPC rating on the government’s EPC register. CPEs are valid for 10 years. If your EPC has expired you will need an up to date one which you can get for around £60-120. If your rental property does not have an EPC rating of C or better, improvements to the property can be made to increase energy efficiency up to the expected legal requirement.

Less expensive upgrades, such as replacing your property’s lighting with LED lighting or draft protection, can be a quick and easy way to improve energy efficiency. Major efficiency upgrades can result in drastic price increases. Insulation – whether it’s a wall, attic or floor – can cost an average of between £1,500 and £14,000. Installing solar panels can have an upfront cost that could cost you around £5,000-8,000. Particularly for older properties, replacing single glazed windows with double or triple glazed windows has an estimated cost of between £4,000 and £6,000. Even upgrading to a new boiler usually costs between £1,500 and £3,000.

How to finance these improvements

These upgrades vary in cost, but with major upgrades costing thousands of pounds, many will need to find ways to raise those extra funds. At Cornerstone Finance we have a range of options, our specialist advisors are here to help you find the most suitable financing solution to raise funds for your energy improvements. These included;

  • Green loans – a green loan is specifically intended to finance sustainable and green energy projects that contribute to an environmental objective. These loans have lower initial interest rates, but to qualify you must spend 100% of the advance on energy-efficient improvements to your home.

  • Equity release – Borrowing against your existing mortgage can be a great way to use up the money tied up in your properties, both residential and rental. Remortgaging or taking out a new loan on your property are ways to unlock invested equity. These are generally a cheaper alternative to personal loans and offer the option of spreading payments over a longer term to help affordability.

  • Localized grants – there are grants available which have been established to help improve the energy efficiency of homes to meet the government’s target of 100% carbon neutrality. These grants can be used to fund things like the cost of installing insulation, new heating and boiler systems, and other measures that increase efficiency.

  • Exemptions – under current guidance, there are certain exemptions from the requirement to meet the minimum EPC rating. If your property meets the exemption criteria, you must register it in the PRS exemption register in order to rent out your property. You may still need to try to increase your EPC rating by making improvements up to the capped amount of £10,000 before you can register as an exemption.

How can we help you

There are ways to generate funds that can prevent homeowners from being caught off guard by these upcoming policy changes and planning for the future now can save you money down the road.

To Cornerstone Funding, we want to help you choose the solution that’s right for you by providing expert financial advice every step of the way. Come talk to us about financial expertise you can trust, with solutions tailored to your individual needs.

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