"Bridging can help landlords meet minimum EPC standards"
Richard Keen (pictured), national account manager at Greenfield Mortgages, said landlords struggling to secure finance to purchase new properties, which need improvement work to bring them in line with minimum energy efficiency standards, should consider a bridging loan.
With landlords unable to continue letting out properties with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’ to new or existing tenants from April 1, 2023, Greenfield Mortgages said a bridging loan could be the answer.
The Birmingham-based company said a short-term bridging loan could enable investors to purchase a target property and carry out the necessary work before exiting on to a long-term buy-to-let mortgage once the work was completed.
Keen said he expects to see an upsurge in interest in bridging finance as the clocks tick down to the April 1 deadline.
“With the date rapidly approaching for when landlords will not be able to let out ‘F’ or ‘G’ EPC rated properties, or else face fines of up to £5,000 for non-compliance, I believe we will see more investors looking for alternative methods of finance,” he said.
“Landlords in these situations can often find themselves facing a chicken-and-egg situation, they need funds to bring a property up to the minimum standards, but they cannot get the funds until the standards are met.”
Keen added that by taking out a bridging loan, landlords can carry out improvement work, such as installing double glazing, upgrading an out-of-date boiler or fitting loft and wall insulation, before exiting on to a term product once the work is completed and the property complies with energy efficiency standards.
“With the government stating that its preferred policy is for properties to be upgraded to EPC band ‘C’ for new tenants by 2025, and for all tenancies from 2028, I think it is a trend we will see continuing to grow in the coming years,” Keen said.
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