‘Green’ mortgage discounts could be a key tool in helping landlords make the energy efficiency upgrades necessary to achieve an energy performance certificate (EPC) rating of C or above, according specialist financial services company Shawbrook.

Under current government proposals, by 2025 buy-to-let properties will need to have an EPC rating of C or better in order to be rented out.

Earlier this year, Shawbrook published its Confronting the EPC Challenge report, which aimed to assess the scale of the issue facing landlords. With 23% of landlords saying one or more of their properties are rated D or below and a further quarter unsure of the current rating of their property, there is a concern that many rental properties will be unrentable in just three years.

However, landlords are now starting to recognise and address this issue, with many starting to make energy efficiency improvements. However, the costs to do so can be steep depending on the work needed.

And, according Shawbrook’s latest survey of landlords, four in ten would welcome help from the lending industry in the form of mortgage discounts for properties with better EPC ratings.

Landlords who had already made energy efficiency improvements said they had funded the work from savings (57 per cent), or loan, sometimes in the form of credit card settlement. Some had even resorted to equity release, second mortgages or bridging loan.

Whether the government proposals around EPC ratings come into fruition this year or not, landlords will need to ensure they protect their income and ensure their properties are legally “‘lettable” as this issue isn’t going to simply disappear’, said Shawbrook managing director of real estate Emma Cox.

‘In order to ensure a healthier and more sustainable rental property market that works for landlords, tenants, communities and the environment, change is needed now.

‘Importantly, however, landlords are not alone in this. Lenders, including Shawbrook, have been thinking about how to help them improve their properties, with a flurry of new propositions being launched this year.

‘It’s vital that we are not just rewarding those landlords with property’s rated C or above, but that we, as an industry, are supporting those who need to make improvements. Earlier this year, we hosted a roundtable bringing together industry experts, including lenders, brokers, landlords, and surveyors, to discuss how the sector can support landlords. We are continuing to use the findings of this work to help shape future products and services, and plan to roll out further support for landlords soon’.

Shawbrook recently announced its Energy Efficiency Discount for new buy-to-let mortgage customers and plans to roll out further support for landlords needing to make improvements to their properties in the coming months.