In 2025, there are new rules set to come into place surrounding the environmental efficiency of rental properties. These laws mean that rental properties with an EPC rating of a D or below will not be able to accept new tenants. In response, existing UK expat and foreign national landlords will need to improve the EPC rating of their rental property in order to ensure that it will remain profitable.
As a result of this imminent change in legislation, a recent report suggested that 17% of UK buy-to-let landlords have refurbished their property to make it more ‘green efficient’ in the last year. Liquid Expat Mortgages examines how a ‘green re-mortgage’ might help to achieve this.
The Re-Mortgage Revolution.
‘There has been a recent trend towards re-mortgaging in the expat and foreign national landlord community’ says Stuart Marshall. ‘There are many reasons for this. In the simplest cases, re-mortgages are used to avoid paying the higher standard rate from the lender (if you signed up to a fixed rate for a limited time). Many of the cases of re-mortgaging that we deal with are to negotiate a new rate, usually because the property has appreciated and is worth far more than when it was purchased. We also frequently deal with UK expats and foreign nationals who are looking to re-mortgage to take out cash as a lump sum and fund other purchases in a larger investment portfolio.’
‘At the moment, many of the re-mortgages that we are seeing from UK expats and foreign nationals are to do with the explosion of choice from lenders in the UK expat and foreign national mortgage market. The UK expat and foreign national mortgage market is not like it once was – there is so much choice currently available throughout a whole range of different mortgage types, making it a great time to be searching for a re-mortgage deal.’
UK Expat and Foreign National Green Re-Mortgages to Grow in Popularity.
‘With the impending changes in legislation and re-mortgages soaring in the way that they currently are, it’s a great time for UK expat and foreign national landlords to restructure their financial agreements in a way that helps to make their rental properties greener. What we’re advising many UK expats and foreign nationals who are looking to re-mortgage is that they consider raising some additional finance to ‘green proof’ their property. By using the existing equity in the property, some of this equity can be released in re-mortgaging and used to fund improvements for the environmental efficiency of your property. In the future, UK mortgages are also likely to be limited to properties that have a higher EPC rating, so in ‘green proofing’ your property, you are also future proofing your property to ensure that it remains mortgageable.’
‘The green agenda that we are seeing emerge is here to stay and we are likely to see the government tie EPC ratings into mortgageability as well as preferential rates for increasing the EPC rating of your property.’
Other Benefits of a Green Re-Mortgage.
Improving the energy efficiency of your property will not only help to make sure that your property passes the new legislation, it will also help to entice renters into choosing your property. In fact, one in ten renters said that they would stay extend their current tenancy if their landlord made environmentally friendly changes to the property. This increased enthusiasm from tenants to rent an environmentally friendlier property also translates to a willingness to pay more for the property. 18% of tenants said they would pay more if their property had new windows; 15% agreed that a new boiler would warrant paying a higher price; 10% said that they would pay more if their property had solar panels.
The cost of renting is also likely to increase if you have a green property since there is likely to be fewer homes available to rent once the changes come into place in 2025. The reason for this is because there are currently 13 million homes in the UK with an EPC rating of a D or below. Without serious renovation, many of these properties will be unrentable and leave the rental market with a severe stock shortage.
For prospective UK expat and foreign national buy-to-let landlords looking to secure a UK expat or foreign national mortgage, choosing the right type of property will be more important than ever. Older properties typically have lower EPC ratings and by 2025 it might be impossible to rent such properties. This may indicate a shift for those looking to secure a UK expat or foreign national mortgage towards newer build properties or to buying off-plan, since renovating older properties to have a higher EPC rating may be incredibly expensive and impact the profitability of your investment.
‘Lastly, there is a growing panel of lenders willing to offer green mortgages to UK expats and foreign nationals. This sector of the market is offering new and innovative products in a race to serve the market in advance of the new legislation. For UK expat and foreign national landlords, re-mortgaging your property and bringing it up to a higher environmental standard will be a great way to take advantage of these new deals and maximise the profitability of your investment for years to come.’
Liquid Expat Mortgages
Unit F2, Waterfold Business Park,
Bury BL9 7BR
Phone: +44 (0) 161 871 1216
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+44 (0) 161 633 5009