Halifax to use EPC rating in affordability calculations

From Tuesday 10th December, Halifax will use a property’s Energy Performance Certificate (EPC) rating in its affordability calculations. 

The lender says it is "now able to better reflect the impact of home energy costs, and some of the financial benefits of more energy efficient homes". 

Assumed ‘cost of living’ values are already incorporated into its affordability model, which include energy costs, and Halifax says adjustment "reflects a more tailored view of these costs". 

For properties with an A/B EPC rating there may be a small increase in the maximum loan amount available and for properties with an F/G EPC rating, a small decrease. There is no change to the maximum loan available for properties with a C, D or E EPC rating or where the EPC is unknown. 

In addition to purchase and remortgage applications, EPC ratings will also be used in affordability for further advance applications and product transfers, where a full affordability assessment is required. 

From tomorrow, Halifax's mortgage affordability calculator will collect an EPC rating and the maximum loan result displayed will be based on the EPC rating selected. 

Intermediaries can also select the EPC rating when keying a Decision in Principle or leave as ‘Please Select’ if the EPC rating is not known. 

The application summary document produced upon submission of an application will now include a section recording the EPC details submitted on the application. 

For new build properties Halifax will accept a ‘predicted’ EPC rating keyed (based on a Predicted Energy Assessment (PEA) or Standard Assessment Procedure (SAP) rating). 

Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said: “We know that typically, more energy efficient homes are cheaper to run. Using EPC data and energy bill analysis, we’re able to reflect that in mortgage affordability.”