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Will green mortgages encourage landlords to improve energy efficiency?

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Landlords could get preferential treatment when applying for mortgages if their properties are energy efficient, as lenders begin to launch new green products to the market.  

This week, Paragon Bank launched a new range of buy-to-let mortgages which offer lower-deposit options to landlords whose properties have an Energy Performance Certificate rating between A and C.

It is offering mortgages with 20 per cent deposits to portfolio landlords who fit in to this bracket – less than the 25 per cent minimum that those with less energy efficient properties must put down.

Going green: Landlords who upgrade their properties to make them more energy efficient are being offered mortgage incentives, including lower fees and deposits

Going green: Landlords who upgrade their properties to make them more energy efficient are being offered mortgage incentives, including lower fees and deposits 

The five-year fixed rate is 3.99 per cent for a self-contained property and 4.19 per cent for an HMO, the latter of which is market-leading. 

Both are fee-free and come with £350 cashback, and they are available for both purchase and remortgage.

Paragon, a specialist lender, said it wanted to encourage landlords to invest in greener homes and increase the proportion of A-C rated properties in the market.

‘Lenders are offering these products to show that they are supporting environmental concerns,’ says David Longhurst, director at broker Connaught Private Finance.

‘With developers also now working to build greener houses it is only natural that they would then follow suit.’

So is the new loan offering enough of a money-saving incentive?  

Landlords with self-contained properties would probably be able to access an equivalent non-green labelled product with a better rate, but Paragon’s fee-free offer could be enticing. 

‘The equivalent non-green labelled product would cost less, around 3.5 per cent,’ says Mark Harris, chief executive of mortgage broker SPF Private Clients. 

‘But the Paragon rate benefits from no product fee and a free valuation, whereas alternatives could have arrangements fees of between £1,000 and 2 per cent.’ 

The cost of carrying out renovations to improve a home's energy efficiency means that, even with mortgage incentives, costs might not stack up for landlords

The cost of carrying out renovations to improve a home’s energy efficiency means that, even with mortgage incentives, costs might not stack up for landlords 

Under Government proposals, homes in the private rented sector will need a minimum EPC rating of C for new tenancies by 2025, and all homes in the sector will require that rating by 2028. 

The number of green products on the market is growing as landlords rush to get up to speed. 

Foundation Home Loans has launched a Green Reward Remortgage, which has a higher minimum deposit requirement of 25 per cent. It has a five-year fixed rate of 3.75 per cent, a and is available whether the property is held in a personal name or via a limited company.

It has a 0.75 per cent arrangement fee, which is lower than the lenders’ usual charge, and offers £750 cash back up to a loan size of £1m. 

Like the Paragon mortgages, it is also available exclusively to landlords with properties that have EPC ratings from A to C. 

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Paragon also launched a Green Further Advance product in February, which is designed to help landlords carry out upgrades to properties with EPC ratings of D or lower. 

However, landlords must have been accepted for a Government Green Homes Grant in order to apply – and that scheme has now been axed.

Richard Rowntree, Paragon Bank’s managing director of mortgages, says: ‘Landlords have made great strides in adding more energy efficient homes to the private rented sector – or upgrading properties to C or above standard – over the past decade. 

‘However, more needs to be done as the Government moves towards its net zero carbon target by 2050 and landlords have a key role to play in that.

‘Our new range of products at 80 per cent loan-to-value for homes with an energy rating of C or above will be an incentive for landlords to add energy efficient homes to the sector, benefiting tenants through lower energy bills and the environment through reduced consumption.’

Lenders’ motives may not be wholly altruistic, however, as there are signs that the Government could start to put pressure on mortgage companies to improve the energy efficiency of the homes they lend on.

Mortgage lenders may soon be required to track and annually disclose the average Energy Performance Certificate rating of the properties they lend against.

Landlords have been told that their lets must have an EPC rating of at least C by 2028. Older properties will be most in need of improvements to get them up to that grade

Landlords have been told that their lets must have an EPC rating of at least C by 2028. Older properties will be most in need of improvements to get them up to that grade 

The Government could then use this information to publish ‘lender league tables’ based on the average EPC ratings within their portfolios.   

If more lenders start to offer incentives to landlords with better EPC ratings, this could lead to reduced rates in future. 

There are currently about 29 million homes in the UK, of which 19 million have an EPC lower than C, according to the Government’s Climate Change Committee.  

Fitting loft, under floor or cavity wall insulation; upgrading to double or triple glazed windows; draught proofing and hot water tank insulation are just some examples of improvements that can boost an EPC rating.

Lenders have already offered incentives to home buyers with energy efficient properties for some time, and brokers say that this could be replicated in the buy-to-let sphere.  

‘A number of lenders in the owner-occupier world already offer more keenly-priced mortgage rates for greener or more efficient EPC-rated properties,’ says Harris.

‘It was only a matter of time before this was replicated in the buy-to-let sector.

‘Green finance and green mortgages have been rising up the agenda for the past few years, and we expect this to increasingly be the case.’

Upgrading their properties specifically to get a better mortgage deal might not always make financial sense for landlords, however. 

Matt Coulson, director at broker Heron Financial, says: ‘Existing property owners could invest in improved insulation or new windows, but the overall financial gains are small, in terms of securing a more favourable mortgage rate.

‘The real gain here is that all of these changes and incentives add up to making a difference to the environment and our move towards net zero.’ 

Energy efficiency for its own sake is something that many landlords may struggle to get on board with.  

Jeremy Leaf, North London estate agent, says both landlords and tenants currently have ‘insufficient regard’ for energy efficiency. 

The Climate Change Committee is proposing all UK homes reach an EPC of band C by 2028 in order to help the Government meet its net zero carbon target by 2050

The Climate Change Committee is proposing all UK homes reach an EPC of band C by 2028 in order to help the Government meet its net zero carbon target by 2050

‘It is only when utility charges are higher, for example, that people notice and are likely to change their behaviour,’ he says. 

According to the Department for Business, Energy and Industrial Strategy, the average energy running costs for a home with an EPC rating of C in England are around £300 cheaper than for a band D home, and £740 less than for a band E home. 

Tax incentives are another way that landlords could potentially be brought on board with the green agenda. 

‘In future, landlords will have access to lower rates and fees which will help increase the profitability of the property,’ says Longhurst. 

‘At the same time, the tax regime regarding maintenance versus improvements needs to be reviewed to encourage landlords to do more.’

Although access to better mortgages, the threat of higher bills and tax changes can all sweeten the deal, many landlords are likely to be incentivised most by the potential penalties if they do not upgrade their properties. 

The requirement to be at EPC grade C by 2028 is drawing closer, and those with older or less efficient properties need to be prepared.  

Mortgage lenders going green 

Green mortgages for landlords may only just be getting started, but they have been on the table for homeowners for some time. 

One in five lenders now has a mortgage in their range that offers lower rates for those with certain EPC ratings, according to the Intermediary Mortgage Lenders Association. 

A further 21 per cent offer mortgages with other financial incentives that encourage borrowers to improve their home’s energy efficiency.

NatWest has launched a green mortgage which offers a discounted interest rate to customers buying a home with an energy efficiency rating of A or B. The discount is usually 0.05 per cent. 

The bank is aiming for half of its mortgage book to have an EPC C rating or above within the next decade. 

Barclays also has a green mortgage offering, which gives buyers a 0.1 per cent discount on their interest rate if they buy a new build property with an EPC rating of A or B. The mortgage must be less than £500,000.  

Other lenders have taken a different approach. Kensington, for example, has launched a green mortgage which pays £1,000 cashback retrospectively to borrowers who make energy efficiency improvements.

In order to qualify for cashback through the eKo mortgage, customers must improve their home’s energy efficiency rating by 10 points based on the standard scoring system used by assessors. The changes must be made within the first year of completion.

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The Cotswold house being sold with a 94-year-old tortoise

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This pretty period property in the Cotswolds has an unusual feature that is being included in its sale. 

While new homes may occasionally try to tempt buyers by including additional items for sale, such as furniture or even a car, this Grade II listed property is on the market for £825,000 with a more unusual – and elderly – offering.

It has a 94-year-old resident tortoise that resides in the garden of the four-bedroom detached house in Wiltshire’s Box.

A 94-year-old tortoise is part of the sale of this stunning four-bedroom home in the Cotswolds

A 94-year-old tortoise is part of the sale of this stunning four-bedroom home in the Cotswolds

Resident Hercules is a local village celebrity and is an impressive 94 years old

Resident Hercules is a local village celebrity and is an impressive 94 years old

The property is called the The Old Diary and is bursting with character features. But its most charming feature is arguably Hercules, the tortoise.

After moving into The Old Dairy in 2007 and becoming custodian of the then 80-year-old resident tortoise, the current owner of the property soon discovered that Hercules is folklore in the village of Box and somewhat a creature of habit.

The current owner – of both the property and the tortoise – has lived in the property for the last 14 years and reports that Hercules can be expected to begin hibernating around 20 October, until emerging again on or very close to 20 April the following year in line with the start of warmer days. 

This is a feat they have seen repeated annually with complete accuracy.

When not hibernating, Hercules is a low-maintenance garden resident who enjoys a diet of lettuce, cucumber, and tomatoes.

While it’s no secret that Hercules is a local village celebrity, a less well-known fact about this four-legged garden friend is that following a visit to the vet in the 1970s, it was confirmed that Hercules is in fact female.

Beyond the walled-garden where Hercules resides, there is plenty more outdoor space to be enjoyed.

The property is full of character features including wooden beams and an Aga in the kitchen

The property is full of character features including wooden beams and an Aga in the kitchen

The property is for sale via estate agents Hunter French, in Corsham, with a price tag of £825,000

The property is for sale via estate agents Hunter French, in Corsham, with a price tag of £825,000

The inside of the period home spans three floors and includes this living room with a cosy fireplace

The inside of the period home spans three floors and includes this living room with a cosy fireplace

The ground floor of the property also includes this large and bright conservatory that leads to the garden

The ground floor of the property also includes this large and bright conservatory that leads to the garden

To the front of the house, there is a gravel driveway and lawned garden bordered by flowers. 

Also in the garden is an outbuilding that was once use as a double garage, but now offers itself as a space with potential for new owners to explore as it was previously transformed into a charming café.

Inside, the period home spans three floors. To the ground floor, there is a kitchen and breakfast room that can be accessed via the tiled entrance hall and boasts a blue Aga.

The formal dining room has access to the cellar and provides the perfect setting for entertaining, while the sitting room is centred around a cosy open fireplace.

Currently a working-from-home space, the third reception room is the oldest part of the property and completes the ground floor, alongside a utility room, cloakroom, and a conservatory.

As well as the family bathroom, there are three bedrooms on the first floor, while the fourth bedroom on the top floor has an ensuite and living space.

The outdoor space includes a driveway and an outbuilding that was once used as a double garage

The outdoor space includes a driveway and an outbuilding that was once used as a double garage

The character property in Box has four bedrooms including a main suite on the top floor

The character property in Box has four bedrooms including a main suite on the top floor 

The top floor includes additional living space that can be used to accommodate extra guests

The top floor includes additional living space that can be used to accommodate extra guests

Helen Whiteley, of property website OnTheMarket.com, said: ‘It certainly isn’t every day you come across a property for sale with its very own resident tortoise.

‘At the age of 94, Hercules has so far lived through two World Wars as well as the reign of four British monarchs, George V, Edward VIII, George VI, and Elizabeth II.

‘If she could, I’m sure she would be able to tell some of the most amazing tales. As it stands, now both the property and Hercules are seeking their next owner to act as their custodian with each full of character, albeit in rather different ways.’

The current owner - of both the property and the tortoise - has lived in the property for the last 14 years

The current owner – of both the property and the tortoise – has lived in the property for the last 14 years

There is plenty of outdoor space that Hercules uses, including a lawn and flower beds

There is plenty of outdoor space that Hercules uses, including a lawn and flower beds

The outbuilding offers the potential for new owners to explore as it was once a charming café

The outbuilding offers the potential for new owners to explore as it was once a charming café

Lauren Walsh, of estate agents Hunter French, in Corsham, – which is handling the sale – said: ‘The Old Dairy is an incredibly charming home filled with character and would make for a wonderful family home looking to make their next move.

‘While Hercules the tortoise is undeniably one of the most popular characters in the local village, Box itself has a lovely sense of community and offers great places to spend days out with family and friends, whether this be in the great outdoors or at one of the welcoming pubs or restaurants on offer.’

The outbuilding could be used as guest accommodation or as a bed & breakfast option

The outbuilding could be used as guest accommodation or as a bed & breakfast option

The inside of the outbuilding could be transformed to help produce an additional income

The inside of the outbuilding could be transformed to help produce an additional income

The village of Box is on the southern slope of the ByBrook valley and in the Cotswolds Area of Outstanding Natural Beauty,

Many of its buildings are made from the natural Box stone which has been quarried in the surrounding area since at least the 8th Century.

The average price of a property in Box is almost double the £329,735 national average at £601,284, according to property website Zoopla.

Peter Gabriel established his state of the art ‘Real World Studios’ in Box and this has helped to attract people from the entertainment industry to settle in the village.

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Ireland’s data commissioner loses sole regulatory oversight of Facebook in Europe

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Europe’s top court on Tuesday endorsed the power of national data watchdogs to pursue big tech firms even if they are not their lead regulators, in a setback for Silicon Valley companies such as

Facebook. The EU Court of Justice (ECJ) ruling could encourage national agencies to act against US tech companies such as Google, Twitter and Apple, which all have their European Union headquarters in Ireland.

Many national watchdogs in the 27-member European Union have long complained about their Irish counterpart, saying that it takes too long to decide on cases.

Ireland has dismissed this, saying it has to be extra meticulous in dealing with powerful and well-funded tech giants. The ECJ got involved after a Belgian court sought guidance on

Facebook’s challenge against the territorial competence of the Belgian data watchdog’s bid to stop it from tracking users in Belgium through cookies stored in the company’s social plug-ins, regardless of whether they have an account or not.

“Under certain conditions, a national supervisory authority may exercise its power to bring any alleged infringement of the GDPR before a court of a member state, even though that authority is not the lead supervisory authority with regard to that processing,” the ECJ said.

Under landmark EU privacy rules known as GDPR, Facebook faces oversight by the Irish privacy authority because it has its European head office in Ireland. – Reuters

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Evo Industrial acquires London warehouse (GB)

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Bradda Capital has sold a prime last-mile logistics site in southeast London to Evo Industrial for over €9.3m (£8m). The 3.4-acre site, One Church Manorway, is located in an established industrial area in Erith and has significant development potential. In September 2020, Bradda obtained planning consent to demolish the current 37,662ft² warehouse and to construct a new 60,687ft² facility with a BREEAM sustainability rating of “Very Good”.

 

David Phillips, managing director of Bradda Capital, said: “We are delighted with the level of bidding interest in the site, which reflected the strength of the logistics real estate market. It is an investment that we bought 10 years ago for income with an eye on the growing demand for warehousing in the London area. With leases at expiry, we realised the potential for adding significant value by securing planning consent for a much larger facility of more than three times the volume”.

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