Buy-to-let lenders, including Aldermore and Suffolk Building Society, are beginning to restrict access to some of the best mortgage deals for properties with energy efficiency ratings below EPC band C.
Research by property data specialist Cotality reveals, however, that some lenders could go even further and start declining all five-year fixed-rate BTL mortgages on properties rated below band C.
It’s raising fears that thousands of rental homes could become ‘unmortgageable’ before the new energy efficiency requirements come into play in 2028 (new tenancies) and 2030 (existing).
In contrast, Cotality’s Temperature Check 2025 report found that competition between lenders was intensifying for properties with EPC band A, B and C properties
Two-tier market
According to the company’s COO, Mark Blackwell, it is creating a two-tier market where higher-rated properties attract competitive finance while sub-C properties face severely limited options, forcing many landlords to sell up.
Currently, there are 2.5 million rental homes rated between D and G, so the number of affected properties could be substantial.
In an interview with the FT, Blackwell explained the industry’s changing approach: “There is a clear desire in lenders to act to mitigate the impact of climate change, starting with the climate risk sitting on their own loan books.
Meeting the challenge of net zero is not straightforward,”
“There’s an imminent regulatory deadline that requires them to do it, but during our research, we found that without more robust data inputs and better access to model scenarios, many aren’t as far on as they want to be.
“There are ways to address this, and our research highlighted that lenders are taking a wide range of approaches.
“What was common to all, though, is that meeting the challenge of net zero is not straightforward, and it will require the co-operation of all parts of the market to achieve it in such a short time.”
