A leading mortgage broker has warned that government efforts to force landlords to upgrade properties to a minimum ‘E’ EPC rating are beginning to filter through more frequently into the mortgage lending system.

It has been illegal to rent out a property with a EPC rating of F or G since April 2018 but, as LandlordZONE reported recently and despite fines of £5,000 for non-compliance, most landlords face few sanctions; at best 6% of local authorities taken enforcement action recently.

Instead, the government has sought to enforce compliance at arms-length by requiring buy-to-let mortgage firms to check if a property has the minimum legal EPC before lending. This can be checked online via the government’s digital service, but it’s currently only a guideline.

“Where a rating of below E is identified, the customer may be required to carry out the work prior to completion or after completion pursuant to an undertaking,” says legal firm Colman Coyle.

EPC complications

But despite this, compliance with these regulations has only recently begun to show itself within the mortgage lending process, says Dan Lee of Total Landlord Mortgages, who he is seeing more mortgages held up by EPC rating complications.

He currently has four which are being re-assessed. “What few landlords realise is that it’s the surveyors who hold the key here – lenders in reality only reject a mortgage application if a surveyor flags up that a property doesn’t have the correct EPC rating,” he says.

“Nevertheless we’re seeing more of these initial rejections coming through and it means we have to work hard with the lenders and landlords to obtain the EPC – it’s a complication at a time when the property sales process is already weighed down by the post-lockdown buying boom.”

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