Comment: Promote new constructions to owners


Like most lenders, the majority of the loans we make to our Rental Landlords (BTLs) are for properties that have changed hands at least once. This is hardly surprising because there are more used goods than new ones for sale.

But BTL investors are buying new construction. In the past 17 months, 11% of our loans have gone to newly built properties.

One of the advantages of a new construction is that it will invariably have an Energy Performance Certificate (CPE) of B. A CPE has two parts. Energy Efficiency Assessment (EER) estimates energy consumption such as fuel costs, and Environmental Impact Assessment (EIR) is based on carbon dioxide emissions.

We launched green mortgages in June. Already, around 10% of requests relate to green products

Government figures for the third quarter of 2021 show that 55% of existing homes have been rated D to G based on the EER and will have higher fuel bills. But even more homes (65%) were rated D to G on the EIR, so they will release more carbon dioxide into the air.

However, new homes are more energy efficient, with about eight in 10 homes having an EPC rating of B, while 96% are rated between A and C.

It’s not just about recently built properties. Data from the Office for National Statistics shows that homes built after 2012 are more likely to be B-rated. Properties built before 1900 have an E rating on average.

All BTL lenders are required to apply for EPCs for the properties on which they are lending.

Most of the existing building stock, about four out of 10 properties, is in the EPC D band. This is reflected in our own mortgage portfolio and is closely followed by loans on C rated properties.

All BTL lenders are required to apply for EPCs for the properties on which they are lending, which must be at least rated E. We cannot legally provide a mortgage on properties with an F or G rating (unless an exemption n has been requested and approved).

This is such an important issue that the Bank of England is now asking banks to report their residential and commercial properties broken down by EPC rating, and to estimate it when no EPC is available.

EPC data allows us to get a clear picture of the energy efficiency risk within our mortgage portfolio. We also need this information for our securitization programs.

Bank of England now requires banks to report residential and commercial properties broken down by EPC rating

If brokers know the EPC rating of the property their client is buying, they can access green mortgages, which offer a discount on the interest rate for properties rated A, B, or C.

We launched green mortgages in June. Already, around 10% of requests relate to green products.

Paul Brett, Managing Director, Intermediaries, Landbay

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