Jump to content

BTL with an EPC F (37)


Seamus

Recommended Posts

Hi,

I’m looking to buy a 3 bed bed terrace with an F EPC rating.  Would this property be mortgagable? Or would it have to be a cash buy? 

It’s just two points outside of the E range. 

It has central heating but poor insulation. 
 

Thanks,

Seamus

 

Link to post

Hi Seamus,

Cash buy, bridging or high risk mortgage application with one of only a handful potential lenders subject to other criteria, valuer's comments and underwriter's discretion... Is it possible to do some works before the valuer goes out to get the EPC rating to E?

Link to post
5 hours ago, Seamus said:

I’m looking to buy a 3 bed bed terrace with an F EPC rating.  Would this property be mortgagable? Or would it have to be a cash buy? 

It’s just two points outside of the E range. 

It has central heating but poor insulation. 

 

It's not currently lettable with an EPC of F, so a lender would surely raise issues. How expensive is it bring the property up to compliance? 

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

Link to post

Hi Vineet, it’s only two points outside if E so it shouldn’t be too hard to do.  But does that mean I need to buy in cash and then upgrade, get a new EPC and then remortgage after owning for 6 mths?  That’s something I would rather avoid as I am just short of the cash needed to buy it.  For the sake of being two points short I’m wondering if some lenders would be more lenient. 

Link to post

Hi @Seamus

The current policy direction in terms of EPC is that residential properties cannot be let, unless the EPC is C or above.  The only question is when this is coming in.  The earliest that has been discussed is 1 Apr 2023 (for new tenancies).

In addition to the above letting requirement, there are another two considerations:

1.  the government's net zero policy - it is effectively going to ask lenders to ensure that their property security portfolio to have EPC grade C or above by 2028, but the dates / directions are not finalised yet; and

2.  the environmental, social and governance (ESG) reporting requirements that are coming in for lenders by 2023, which means that lenders will be obliged to disclose / analyse their property security portfolio EPC performances.  Whilst details are not fully in place, I would be surprised if lenders don't start imposing EPC requirements, as to whether they would lend to properties lower than C, from the relevant time.

In short, unless you are receiving a very substantial discount on the property that has its EPC rated F (and has the potential to go into C at least), and/or you have enough cash to fund the property / work / higher payments whent the property is not mortgageable, I would personally skip this property - since it is the seller's problem to fix all these if the seller wants to achieve better pricing or sell.

Hope these helps.

For the avoidance of doubt, the above (a) does not constitute legal advice (and no lawyer-client relationship is formed in any way) and (b) is set out for your reference only.  You should seek formal legal advice and appropriate professional advice (such as from a mortgage broker) for your matter.

Kerry

Link to post

Thanks Kerry, lot to think about there.  I’m waiting to hear back from my broker and the agent to discuss options.  The house is up for £160k but already has two offers at £175k both mortgage buyers although they agent couldn’t confirm if they were investors or looking for a home. 

Link to post

Hi Seamus,

A few specialist Lenders offer Refurbishment BTL's, for cases like this. You essentially take a Bridge, and once the works are completed you move onto one of the Lenders BTL products. More expensive than a standard BTL, but it's an alternative to cash buy. Or just an ordinary Bridge as mentioned above.

 

Link to post

Thanks J.  That’s quite interesting.  I’m happy to spend up to £10k now to make it more energy efficient and while I’m doing some renovations. I had applied to the green homes grant on another house but that was a nightmare. For this one I might just get a few quotes and do it.  Provided I get the house. It’s going to best and final bids.  I have a feeling that despite the F issue,  in this market it will go £20k + over asking price. 

Link to post
On 1/17/2022 at 10:46 AM, mortgageinfo said:

Hi Seamus,

A few specialist Lenders offer Refurbishment BTL's, for cases like this. You essentially take a Bridge, and once the works are completed you move onto one of the Lenders BTL products. More expensive than a standard BTL, but it's an alternative to cash buy. Or just an ordinary Bridge as mentioned above.

 

Yes that’s an option but an expensive one.  My broker is talking to two lenders who are interested in potentially lending, 1.8% - 2% 2 yr fixed.  Definitely my preferred option.

Link to post

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...