How landlords can use bridging finance to meet minimum EPC standards

Landlords struggling to secure finance to purchase new properties which need improvement work to bring them up to minimum energy efficiency standards should consider a bridging loan, Greenfield Mortgages has said.

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 1 April 2023, Greenfield Mortgages has suggested that a bridging loan could offer the ideal solution.

Greenfield says that as some lenders won’t consider lending on properties that fall below the EPC E rating, a short-term bridging loan could enable investors to purchase a target property and carry out the necessary work before exiting onto a long-term buy to let mortgage once the work was completed.

Richard Keen, Greenfield Mortgages’ national account manager, said: “With the date rapidly approaching for when landlords won’t 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’ll see more investors looking for alternative methods of finance.

“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 can’t get the funds until the standards are met.

“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taking out a bridging loan, landlords can carry out improvement work, such as installing double glazing, upgrading an out-of-date boiler or fitting loft and wall insulation, before exiting onto a term product once the work is completed and the property complies with energy efficiency standards.

“And with the government saying 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’s a trend we’ll see continuing to grow in the coming years.

“Time is often of the essence when it comes to arranging finance, so it’s worth knowing that a bridging loan can be arranged quickly and the process is much easier compared with other more traditional ways of borrowing.

“At Greenfield Mortgages, we provide clients with a credit-backed decision within two hours, and we complete on the majority of cases within 10-14 days, with some deals completing in as little as five days.”