Buy-to-let landlords and property investors looking to go greener with their investments now have more options than ever when it comes to eco-friendly mortgages.
Housing is a key factor in the UK government’s target for the country to become carbon-neutral by 2050, and with housing currently making up 14% of Britain’s total emissions (a greater carbon footprint than the farming industry), lowering carbon emissions and increasing energy efficiency in the sector is fast becoming a priority.
It is therefore good news for buy-to-let (BTL) investors that the green mortgages market has seen a dramatic surge in recent months, with more lenders now offering products with an eco-friendly emphasis to reward landlords that can prove their property is more energy efficient.
According to the broker Mortgages for Business, there are now over 350 green BTL mortgage products currently on the market - its highest ever level. Their research indicates that the number of products available has experienced an almost 90-fold increase from March 2021 when there were only four green BTL mortgages on the market.
Overall, eco-related mortgages now make up 15 per cent of all BTL products on the market.
For those who own BTL property within a limited company rather than in their personal name, almost one in five mortgage products are now green.
What are green mortgages and what benefits do they offer?
A green mortgage typically offers landlords and homeowners a preferential deal when they either buy an eco-friendly home or make energy-efficient enhancements to their property. This is usually in the form of increased borrowing, cheaper interest rates or extra cashback.
For example, The Mortgage Works offers preferential green further advance rates to landlords where the spending will be on energy efficiency improvements, whilst NatWest offers discounted rates and the potential to get cashback paid to your solicitor on the day you drawdown your mortgage.
What are the requirements for a green mortgage?
For those wishing to apply for a green mortgage, normally lenders will be looking for the property to achieve a higher EPC rating, often in the A-C range but others like Natwest may limit it to the highest A and B rated properties only.
However, each lender can take a different approach so it's important to check the specific requirements and benefits offered.
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Original sources:
https://www.landlordtoday.co.uk/breaking-news/2022/3/green-mortgages--huge-rise-in-number-aimed-at-buy-to-let-landlords
https://www.thisismoney.co.uk/money/buytolet/article-10660757/Could-green-buy-let-mortgage-better-rate.html
https://www.mortgagesforbusiness.co.uk/
