"Bridging finance could help those landlord customers who need to carry out refurbishments or renovations to an existing buy-to-let property"
Whether it’s making sure we recycle our household waste regularly, perhaps taking public transport more often instead of jumping in the car or simply using a refillable water bottle instead of a single use container, there are countless things we can all do to make a difference.
To help the UK achieve its carbon reduction targets and improve energy efficiency standards, the Government introduced the Energy Performance Certificate (EPC) back in 2007. Now, whenever a property in the UK is constructed, sold or rented out, it has to have a certificate showing how much energy it uses and how it rates in terms of energy efficiency based on factors such as insulation, heating and hot water systems.
Properties are given a rating from A (most efficient) to G (least efficient) and all rented buildings must have an up-to-date EPC which must be made freely available to any prospective tenants at the earliest opportunity.
Then, in 2017, the government set out in the Clean Growth Strategy1 (CGS) its goal of ensuring that as many homes as possible are upgraded to EPC band C by 2035. In the private rented sector, the CGS went even further by saying the preferred policy scenario is that improvements for new tenancies are achieved by 2025, and for all tenancies from 2028.
Now don’t get me wrong. Anything which improves the conditions for tenants living in rental accommodation, not to mention the positive impact it will have on the environment, is to be applauded and something everyone should support.
What does worry me slightly, however, are the time scales involved and the impact it could have on the buy-to-let market. Although the dates are still only proposed and are still open for consultation, 62% of landlords say they will be likely to purchase properties with an EPC rating below C in the future, while more than 40% of them still don’t have full awareness or an understanding of the new legal requirements.
So if you’re approached by a customer who needs to make improvements to a property to raise its energy efficiency standards, do you know what options are available to help them?
Well, did you know that a bridging loan could be the ideal solution? If you’re unfamiliar with bridging finance, it’s basically a flexible, short-term borrowing option for those looking for a fast turnaround to meet tight transaction deadlines.
Bridging finance could help those landlord customers who need to carry out refurbishments or renovations to an existing buy-to-let property, for example fitting double glazing, adding insulation or installing a new boiler.
Alternatively, if you’ve got a landlord customer who’s considering buying a property which requires improvement work before it can be let out, did you know that refurbishment buy-to-let could be an option?
Refurbishment buy-to-let brings together the flexibility of bridging finance with the surety of an exit onto a long-term buy-to-let mortgage once any improvement work has been completed, providing the property meets the expected valuation following refurbishment.
Of course, bridging finance is not the solution for everyone and making sure your landlord customers get the best advice for their individual circumstances is crucial, but it should still be an important part of every brokers’ toolkit. Not only will you have more options at your disposal should a suitable scenario present itself, your landlord customers will also have access to a product which could help them ensure their properties are energy efficient.