A specialist buy to let mortgage lender says buy to let investors should act now - even if it means borrowing more - to ensure their properties conform with new energy efficiency rules coming into effect in the next few years.
In April this year investors were required to meet new Minimum Energy Efficiency Standards with a minimum EPC rating on their properties of E, before they could rent out property to new tenants, unless the building qualified as exempt.
However, the longer term will see regulations that affect all rental properties, and those failing to comply with new criteria will not be able to be let to tenants and could also incur fines of up to £5,000.
MEES rules mean that from April 2020 all existing lets will also need to meet the MEES requirements, meaning all rental properties will have to have an EPC rating of E or above. Even if the tenancy is already running, from April 2020 the property will need to meet these standards.
Commercial Trust, a specialist mortgage firm selling products to the buy to let sector, says last October AXA reported that one in 20 properties still fell below minimum standards, with the knock-on effect that tenants were overpaying on their energy bills to the tune of an estimated £13 million each month.
The mortgage firm claims that with rental demand already at an all-time high and outstripping existing demand, the 2020 deadline for landlords to meet MEES could be a ticking time bomb for a housing market already at full stretch.