"By providing tailored advice, intermediaries can empower clients to make informed decisions that align with their financial and environmental goals."
At the turn of the new year, many people many have set fresh resolutions focused on personal growth, financial stability, or environmental responsibility. While some of these may already have fallen by the wayside by the time you read this, many homeowners are increasingly prioritising energy efficiency and sustainability with an eye on both shorter and longer-term goals.
For landlords, these considerations are playing an increasingly prominent role in ongoing yield and profitability calculations, with energy-efficient properties not only attracting tenants but also aligning with evolving regulations and market expectations.
The rise of green finance
The green finance market, especially within mortgages, remains relatively nascent but is gaining traction. Increased consumer awareness, regulatory pressures, and the broader push for sustainability have combined to highlight the importance of energy efficiency across the UK housing stock. Recognising this shift, a growing number of lenders are offering innovative products within their product ranges that align financial incentives with environmental objectives.
This can come in the form of providing homeowners and landlords with the opportunity to secure favourable terms, such as lower interest rates or cashback, for investing in eco-friendly property improvements or homes with lower carbon emissions.
By encouraging modern methods of construction and energy efficient upgrades, this kind of lending intervention will not only help advance environmental goals and improve the overall performance of the UK housing stock but also deliver long-term benefits to property owners, such as reduced energy costs and potentially bolster resale values. Advances which outline a pivotal intersection between financial innovation and environmental stewardship, paving the way for a more sustainable future.
Understanding EPC ratings
A critical aspect within this is the Energy Performance Certificate (EPC) rating assigned to each property. However, despite its importance, according to research from epIMS, only 5% of landlords understand how their properties' EPC scores are calculated.
EPC ratings, which range from A to G, are determined by a numerical points system. For instance, a property rated D may be just one point away from upgrading to a C. Understanding these nuances can help landlords make targeted improvements that maximise their energy efficiency scores.
Interestingly, not all sustainable measures yield the highest EPC gains. For example, the research points out that while a biomass boiler is eco-friendly, it adds fewer EPC points (+12) than a standard condensing gas boiler (+23). Other impactful upgrades include solar panels (+9.91 points), room-in-roof insulation (+9.91 points), and wall insulation (+7.7 points).
The role of the intermediary
This data helps outline a unique opportunity for mortgage intermediaries to fill the knowledge gap and guide clients through the complexities of green finance and the EPC journey. By providing tailored advice, intermediaries can empower clients to make informed decisions that align with their financial and environmental goals.
By helping landlords explore the right type of financing options for the right types of energy-efficient improvements, intermediaries can position themselves as trusted partners in achieving cost-efficiency and sustainability objectives. This guidance not only supports profitability and tenant demand but also ensures compliance with potentially stricter EPC standards in the future.
Of course, landlords will likely adopt diverse approaches to meeting these standards, from minor updates to major property enhancements, which further underlines the need for personalised advice. Within this, green mortgage solutions may offer a strategic means to finance these upgrades, enabling intermediaries to deepen client relationships and broaden their service offerings.
A sustainable commitment
As demand for greener solutions continues to rise, intermediaries who adapt to this trend will play a pivotal role in advancing the conversation around the transition to a more carbon-friendly housing market. So, in 2025, let’s make sustainability more than just a fleeting resolution - let’s turn it into a lasting commitment.
