Paragon Bank incentivises Eco-Conscious Landlords with New 80% LTV Mortgage

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Landlords in the United Kingdom have for some time been urged by the government to make every possible effort to improve the energy efficiency of the properties in their portfolio. Little, however, has been provided by way of financial incentives for those wishing to do so.

Recent proposals introduced by the government will make it a formal requirement for every home within the private rental sector to have at least an EPC rating of C by 2025 for new tenancies. By 2028, all homes within the PRS, without exception, will need to have a C rating or higher.

In order to motivate buy-to-let landlords to purchase more energy-efficient properties and work towards more sustainable portfolios, Paragon Bank has announced the introduction of an all-new 80% LTV mortgage for new and established landlords. The new range of high LTV mortgages will be available for the purchase of standard rental properties and houses of multiple occupations, on the condition that they currently have an EPC rating between A and C.

It is hoped that the initiative will encourage more landlords to purchase more environmentally friendly properties in order to increase the prevalence of rental homes with an A to C energy rating within the private rental sector.

Slow but steady progress

The most recent MCHLG English Housing Survey indicated that the proportion of homes within the private rental sector with energy ratings of A to C has been increasing significantly over the years. It is estimated that there are currently 1.8 million A to C energy-rated homes in the PRS, up an impressive 272% over the past 10 years.

This, however, also means that around 60% of all rental properties within the sector still have an energy rating of D or lower. While many have welcomed the government’s proposals regarding a minimum A to C energy rating requirement by 2028, others have criticised the lack of direct incentives available for landlords looking to make positive improvements.

The new 80% LTV mortgage available from Paragon Bank will be offered as a five-year fixed-rate loan starting at just 3.99% APR, including £350 cashback, no product fees, and free valuations. The lender also confirmed that the loans would be available for landlords looking to purchase single-self-contained properties and HMOs.

Speaking on behalf of Paragon Bank, managing director of mortgages Richard Rowntree commented on the progress being made within the BTL community towards a more sustainable and energy-efficient future.

“Landlords have made great strides in adding more energy-efficient homes to the PRS or upgrading properties to C or above standard over the past decade,” he said.

“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% LTV 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.”

Mr. Rowntree went on to state that it is also the responsibility of lenders to ensure that landlords looking to make conscientious improvements to their properties have access to the financial products they need,” he continued.

“If landlords are to improve the energy efficiency of PRS stock, they need the finance to enable them to do so.

“Making sure there are attractive options to add new stock while recognising the efforts to upgrade existing properties is an important element of this.”