The lack of clarity around energy efficiency

However, Rishi Sunak also u-turned on a series of policies from previous Conservative administrations aimed at reducing climate change-causing emissions and meeting the country’s ‘net zero’ commitments.

The most important announcement as far as the property market was concerned was of course the scrapping of the requirement for landlords to ensure their rental properties had an Energy Performance Certificate (EPC) rating of at least C by 2025 for new tenancies and 2028 for all tenancies. 

I don’t know whether the Prime Minister expected to receive widespread praise for his decision, but I doubt he was overly pleased by the overall response he actually achieved. Of course, the news was welcomed by trade bodies representing landlords’ interests, but above all, the impression I get from the industry is that more than anything, stakeholders crave certainty. Regardless of anyone’s particular political views, it is true to say that without certainty and clarity, forecasting and planning are very difficult and so this volte-face really didn’t ‘appear’ to inspire confidence in the government’s long-term plans.  

Mixed opinions

If Mr Sunak thought anti-energy efficiency measures would generally be popular, he must now feel sadly disappointed. It seems unlikely that he’d read up on this as thoroughly as he might have done.  For example, it doesn’t look like he read research carried out by Mortgage Advice Bureau in the summer, which found that 41% of landlords believed that, outside of legal obligations, the (now-scrapped) EPC requirements were important for the environment and would help the UK to tackle the climate change crisis. Of course, landlords are businesspeople who need to make a profit, but many of them will be parents and grandparents and like the rest of us, will also worry about the state of the planet for the next generation. 

While the EPC proposals would have seen many landlords needing to spend money to get their properties up to scratch, most were not looking at very large sums to achieve this. A number of bridging finance providers have been busy marketing EPC-related refurb solutions for landlords, while some buy-to-let lenders are now offering ‘green mortgages’ to incentivise improvements to rental properties.

Various other surveys have highlighted that energy efficiency is also really important to tenants too, especially in the middle of a cost-of-living crisis. Another piece of research that perhaps the PM didn’t consider was that which Shawbrook published earlier in the year as part of its Confronting the EPC Challenge report.  This found that young private renters are particularly engaged on energy efficiency, with 72% of renters aged 18-34 saying they always check the EPC rating of a property before making any decisions. This is compared with 52% of those aged over 55 years old.

In addition, talking to brokers reveals that many seem to believe that despite what the Prime Minister might say now, energy efficiency regulations many well be back on the agenda after the General Election, which will need to take place before the end of 2024.

Importantly, cherry is very much a forum with its focus towards industry considerations and away from political standpoints - although the comment made by one user on the cherry industry forum did seem to be reflective of a general view which was that whatever the electoral outcome, there will be yet another volte face to come. 

“…I can see the EPC rules coming back in after the next election.”

Green mortgage frustrations

So-called ‘green mortgages’ have been a popular topic on the cherry adviser forum recently, but not in a good way. Brokers have repeatedly been frustrated with sourcing systems which don’t make it clear, up front, whether the product the adviser is considering recommending is a green mortgage or not. Commentators have bemoaned the fact that it often only becomes apparent that the product is ‘green’ after they are some significant ways into the search process. This means they waste time and effort and often have to start again from scratch.  And, depending on how far things have progressed, this may risk damaging their relationship with the client.

Advisers on cherry suggested that sourcing system providers could maybe colour-code products to make it clear from the beginning that the deal in question was a green mortgage. One cherry contributor even reported that a provider had taken the suggestion on board and was looking into the feasibility of implementing the change. This highlights something I’ve been urging for a while, namely that providers really do need to engage with the broker community more directly by getting and using their own free Provider Forum areas on cherry.

 Actually, engaging with advisers can help them to quickly establish, appreciate and react to the issues that these men and women, who are right at the sharp end, are really experiencing.  There is a clear need for a more efficient way to feed important changes directly and swiftly into the product development process. 

Despite the government’s policy shift, there is still significant demand for energy efficient rental properties, and I don’t expect the availability of green mortgages to reduce any time soon. That said, brokers may well look at them more favourably, if all sourcing systems clearly and immediately distinguish them from other products.

Bottom line – whether the subject matter is green mortgages or any of the many other issues affecting the hard working people who engage directly with consumers, lenders - indeed all other providers of products or  services to them, need to engage with them better – and soon please. 

Donna Hopton is Director at cherry