MAC How does an EPC affect my mortgage
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01/07/22
Buying

How does an EPC rating affect your mortgage?

With sustainability playing an increasingly important role in today’s housing sector, EPC ratings are emerging further to the forefront of concerns for buyers and sellers. And rightly so - your property’s EPC rating has high stakes in whether your property will sell.

The ‘Energy Performance Certificate Rating’ measures your property’s energy efficiency. It’s measured from A to G – ‘A’ being most efficient and ‘G’ being least. The higher the rating, the less it costs to heat and power the property.

A poor EPC rating implies poor efficiency, which means the property may be more expensive to run and have more of a detrimental impact on the environment compared to a property with a good EPC rating.

EPC’s can also measure the property’s carbon dioxide emissions, and in today’s current climate, this will be a huge deciding factor for many buyers who don’t want their carbon footprint to become the size of a house.

An energy efficient home means a cost-efficient home, and a property with low efficiency will struggle to compete in today’s market. Sustainability is the trend that is taking the UK by storm and its cloud casts an ugly shadow over energy waste.

For buyers looking for a property to live in, it’s important to note that mortgage companies will certainly lend on properties with low EPC ratings.

However, it’s likely that they will recommend potential improvements which could be made to bring the property to a minimum 'E' rating, and any improvements needed will be reflected in the property’s valuation.

So, as a buyer it’s important you’re aware of the property’s rating before putting your offer in.

For those in the buy to let category, if you have a low EPC rating such as ‘F’ and ‘G’ then your mortgage application is set up for potential failure. Under current government proposals, by 2035, all homes will have to obtain an EPC rating of C or better.

This could make getting a new mortgage deal harder and more expensive.

Nicholas Gray, sales, and marketing director at property developer Native Land, says: ‘The Government’s new plans could also mean mortgage lenders have to have an average EPC rating of C across all the properties on their lending book by 2030. Mortgage lenders will already be thinking about implementing this. Which means it could become much harder to get a mortgage on properties that are not energy efficient or to re-mortgage. Buyers should be very conscious of this when choosing a property.’

How can I improve my property’s EPC rating?

If your EPC rating is just in the margins, then it will not take too much to raise it by one or two ratings. Switching to LED light bulbs – which are much more energy-efficient and eco-friendly – could make all the difference. Other methods include wall and roof insulation, double glazed windows, and installing smart meters and energy efficient boilers.

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