If you own a rental property or you are thinking of buying one, the EPC rating has become one of the most important numbers to pay attention to. It affects whether you can legally let the property, which mortgage deals are available to you, and how attractive the property will be to future tenants and buyers.

What is an EPC?

An Energy Performance Certificate gives a property an energy efficiency rating on a scale from A, the most efficient, down to G, the least efficient. It takes into account factors such as insulation, heating systems, glazing and roof condition. The certificate is produced by an accredited assessor and is valid for ten years.

If you have purchased or let a property in recent years, you will already have one. If you are unsure of your current rating, you can look it up on the government's EPC register.

What are the current rules for landlords?

In England and Wales, rental properties must have a minimum EPC rating of E before they can be legally let. Properties rated F or G cannot be let without a valid exemption, for example where the cost of making improvements exceeds the permitted spending cap, or where listed building restrictions apply.

What changes are being proposed?

The government has been consulting on raising the minimum standard for rental properties, with proposals centred on requiring a minimum rating of C. The proposed timeline has been revised several times, so the precise requirements and dates are still subject to change. If you are making investment decisions based on future rules, it is worth monitoring official guidance as it develops.

What is clear is that the direction of travel is towards higher energy efficiency standards. Many landlords will need to invest in improvements over the coming years, and planning ahead is considerably easier than leaving it until regulations are confirmed.

How does the EPC rating affect your buy-to-let mortgage?

Lender restrictions on lower-rated properties

Some lenders have already introduced restrictions on properties with lower EPC ratings. A number will not lend on F or G-rated properties at all, and as minimum standards rise it is likely that more lenders will tighten their criteria. If your property's rating falls short of a lender's requirements, your choice of available deals will be narrowed.

Green mortgage incentives

At the other end of the scale, several lenders now offer preferential rates on properties with higher EPC ratings, sometimes referred to as green buy-to-let products. If your property is already rated A, B or C, it is worth asking whether a green rate is available when you next remortgage or switch products.

Valuations and loan-to-value

Energy efficiency is increasingly reflected in property values. A higher EPC rating can support a stronger valuation at survey, which in turn affects the loan-to-value calculations that determine which mortgage rates are available to you. Conversely, a poor rating can attract a lower valuation or additional lender scrutiny.

What should landlords do now?

If you are unsure of your property's current EPC rating, find out. If it is D or below, it is worth getting an updated assessment and asking the assessor what specific improvements would be needed to move up a band or two.

Common improvements include loft insulation, cavity wall insulation, upgrading to a more efficient boiler, and fitting double glazing where it is not already present. Costs and practicality vary considerably depending on the property type and age, but acting earlier rather than later gives you more time to plan expenditure and, where relevant, to factor improvement costs into your remortgage or refinancing plans.

If you are considering a new buy-to-let purchase, treat the EPC rating and any likely improvement costs as part of your upfront due diligence, not an afterthought.

Getting advice on your buy-to-let mortgage

Whether you are reviewing an existing portfolio or looking at your first investment property, it pays to take mortgage advice alongside the property decisions. Lender criteria for buy-to-let have become more detailed in recent years, and the EPC picture is just one element to consider.

Our buy-to-let mortgage advice service covers the whole market, so we can find the most suitable deal for your property and circumstances.

If you have not already read our post on the Renters' Rights Act and what it means for buy-to-let mortgages, it is worth reading alongside this one. The two topics are closely linked for anyone managing a rental portfolio right now.

Ready to find out more?

We help landlords review their buy-to-let mortgages and navigate changing lender criteria every day, whether you have one property or a growing portfolio. Find out more about how we support buy-to-let clients here:https://aspectmortgages.co.uk/mortgages/buy-to-let

Or get in touch with our team directly. We are happy to talk through how your EPC rating could affect your mortgage options.