Maeve Ward, director of commercial operations at Mercantile Trust, casts her eye over what's needed to help make properties more energy efficient
This article was provided by Mercantile Trust.
I really enjoy working in the intermediary specialist lending market. I am dedicated to making Mercantile Trust and its sister firm, Central Trust, as competitive as possible, to increasing lending and maximising profits for our parent. As is the case with all markets, any increased success will be down to either increasing the customer and lending base or taking business from one of our competitors.
That said, I equally enjoy the moments when I can meet industry colleagues – those aforementioned competitors – and talk about issues affecting our market, how we can collectively improve and so on. During the past month I managed to spend a day at NivoCon, where the great and good from the second charge industry discussed how technology can improve all areas of our world. I also got to attend Square 1 Media’s Mortgage Market Debate, which brought together senior leaders and stakeholders from across the mortgage industry for a frank and honest discussion about the future of the intermediary market.
It's always refreshing to spend time with competitors; good ideas and practices can come from any areas of the market and we should be continually open to new ways of working (even if we can’t stand the messenger sometimes!)
That’s why I’m always happy to celebrate initiatives from other lenders when they benefit the market as a whole, and/or because they are the right thing to do.
Good practices
Now, and I while I know I’m not the only one, I have been talking constantly for nearly two years about the need for landlords to not ignore the new Energy Performance Certificate (EPC) rules for landlords that are due to come into force in 2025. It’s a subject which is really important to me and also one which specialist lending can play a significant part in addressing, so I’ve been really heartened to see a range of industry participants contributing in spreading the message and even presenting incentives for those who need to make enhancements.
Bridging lender Glenhawk, a competitor of Mercantile Trust, recently launched an end-of-term discount to borrowers who complete light or medium refurbishments and improve the EPC rating of their property. They are then eligible for a discount of up to 0.25% in achieving an EPC rating of C, or 0.50% for a rating of B or higher.
Why do I like this so much? Because it’s a real improvement on what was previously available, namely providing landlords and property investors with a 'green discount' on properties which already have an EPC rating of C or higher. Glenhawk’s innovation actually operates as an incentive to get work done, which is what needs to happen - en masse - if the private rented sector (PRS) is going to meet the 2025 deadline.
Meanwhile another competitor, Shawbrook, should be praised for highlighting the issue of energy efficiency in rental properties in its Confronting the EPC Challenge report published earlier this year. It stressed how much more younger renters are paying closer attention to the energy efficiency of their properties than their older counterparts. The continuing rise in the cost of living means that the issue is only going to increase in importance for tenants.
Specifically, the report found that 58% of all private renters are less likely to consider a rental property with an EPC rating of D or lower, while 72% of renters aged 18-34 always check the EPC rating of a property before making any decisions.
I’d also like to mention Together, who has been publicising the EPC issue throughout 2023 and has just launched its EPC Hub for Intermediaries, providing tools for brokers to help their clients stay informed about energy efficiency and EPCs.
The way forward
As I said earlier, it’s important that everyone in the industry plays their part with this issue. That’s why Mercantile Trust has partnered with Elmhust Energy, a leading environmental monitoring, performance testing, and energy consulting firm, to develop a free EPC guide for landlords. The guide is designed to help landlords create a plan of action, establishing what needs to be done to each property within their portfolio in order to secure an EPC rating of ‘C’ or above, what the likely costs are to do so and where the financing can come from.
Landlords are looking at fines around £30k for breaking EPC rules come 2025 and that’s for each non-compliant property. It’s time everyone in the market ensured landlords know what they have to do, and help them to get there. That’s why we really encourage brokers to download the guide and share it with their property investor clients as soon as possible.
You can download the guide here.
Maeve Ward is director of commercial operations at Mercantile Trust
