Availability of green BTL mortgages surges to record high

Green products now comprise 15% of all BTL products on the market

Availability of green BTL mortgages surges to record high

The number of green product choices in the buy-to-let sector has risen to its highest level, research from BTL mortgage broker Mortgages For Business has outlined.

There were 353 green BTL mortgages on the market as of March 01, 2022, compared to only four on March 01, 2021

The number of products increased for the seventh consecutive month since August 2021 when there were only 118 green BTL mortgages on the market.

With the total number of green products available in the buy-to-let mortgage sector rising to its highest level ever, green BTL mortgages now make up 15% of all BTL products on the market.

Limited company products saw even greater improvements in the extent of green choice on offer; rising to 244 deals this month. Green products also currently account for a larger slice of the limited company BTL market than ever before, with green products now representing almost 19% of the total.

“This demonstrates not only the recovery in the BTL sector, but also the willingness of lenders to innovate,” Gavin Richardson, managing director at Mortgages for Business, said. “While there are more green products for individual owners, there are now 312 on the market – the most marked increase was in limited company lending, where the number of products has risen by more than five-fold since August last year.”

Read more: Going green in buy-to-let.

Richardson noted that following the end of the stamp duty holiday, which had kept the property market buoyant for much of 2021, providers are now focusing on enticing landlords with greener products.

“The government has committed to making Britain carbon-neutral by 2050,” he said. “Upgrading existing housing stock with energy efficient improvements and making new-builds even more green can lower the sector’s carbon emissions.”

Richardson also shared that at 14% of the UK’s total emissions, housing has a greater carbon footprint than the farming industry.

“There’s no question that improving energy efficiency is a critical part of tackling climate change,” he said. “On the other hand, this criticality of meeting the climate change challenge doesn’t make it any easier for landlords.  The average bill for landlords looking to improve their property is between £6,000 and £15,0000.  When we asked them, only 38% of landlords told us that they could afford to invest in making their BTLs more energy efficient. Mortgage lenders have a huge part to play in helping landlords to fund their efforts - they have a responsibility to provide the facilities to allow landlords to fund this.”

Just under a quarter of landlords’ properties have an Energy Performance Certificate (EPC) of D or below. The problem of updating properties is exacerbated by older housing stock in the UK, as they are more likely to have poorer EPC ratings and will need more money to improve. Some 36% of properties in the private rented sector were built before 1940.

Proposed regulations state that new tenancies should have an EPC rating of C or above from 2025, and all existing tenancies should get to that rating by 2028.