The Intermediary – May 2025 - Flipbook - Page 46
BUY-TO-LET
Opinion
Time to take the
of the buy-to-let
he countdown to net
zero has seemingly
been pushed into the
media background
as US trade tariffs,
Russia, China, and
European relations dominate the
international agenda.
Nevertheless, it is very much still
on, and for Britain the first very
tangible deadlines are now looming.
Under former Prime Minister
Theresa May, the UK pledged to
cut net carbon emissions by 100%
by 2050 in England, Wales and
Northern Ireland, and by 2045 in
Scotland. As it stands, this deadline is
enshrined in law.
To reach it will require ‘near
complete’ decarbonisation of the
country’s housing stock. In 2023,
residential buildings accounted for
12% of UK emissions, according to
Government’s advisory body the
Climate Change Commiee, making
domestic buildings the second highest
emiing sector in the UK economy.
T
Private rented stress
The new-build sector, and the
coldest homes in the private rented
sector (PRS), are already subject
to Minimum Energy Efficiency
Standards (MEES).
The private rented sector is next
in line for significant change.
Aer several years of ‘to and
fro’ on deadlines, the current
Government has confirmed
that that all private rented
homes must achieve at least
an Energy Performance
Certificate (EPC) rating
of Band C from 2030
onwards. The higher
standard will apply
to new tenancies
from 2028. Failure
to comply will mean
landlords receive a £30,000 fine
per property.
For landlords, the process of
retrofiing properties to ensure
they comply is proving a headache –
particularly where leasehold terms,
construction types and cost mean
works are not feasible. Of course,
some homes may be more challenging
– for example due to construction type
or lack of third-party consent, but the
cost cap is higher and has raised the
bar for exemptions.
There is also the effect the
regulations have for lenders. There
is an inherent risk siing on backbooks where properties fail to
comply with the rules. There is also
the complication that not all new
tenancy agreements coincide with
new mortgage deal terms. This
creates the potential for interrupted
cashflows, with a direct consequence
for mortgage payments.
Added to this is the
fact that not all of
the incoming
regulation
is agreed
yet.
MARK BLACKWELL
is COO at Cotality
