I plan on buying an HMO with EPC label D and am looking for financing. Can you tell me something about the upside of refurbishment for improving the EPC label to B or A and explain available retrofit scheme’s and mortgage advantages?
Improving your energy label from D to A may qualify the property for discounted mortgage pricing, subject to lender criteria, of up to 0.25% per EPC band, alongside cashbacks of up to £2,000,- upon closing the loan.
The refurbishment capex expenditure can be financed at low to zero interest rates. Upgrading to EPC A increases the property’s base market value today by roughly the sum of the refurbishment capex and positions it to compound at the high end of market growth, as opposed to label D estates compounding at the low end. Naturally, borrowing capacity increases with higher market value, whilst premium EPC-housing qualifies for better LTV, both for acquisition and refinancing.
For cash flow assume a £ 50,- to £ 100,- monthly utility bill savings per suite, compounding annually. We generally consider 0.5 reduction in void months per suite due to the attractiveness of sustainable housing.
To summarize: Improving EPC allows for decreased mortgage interest rates while increasing property valuation (growth). Better rental prices with improved occupancy rate increases passive income.
Wij willen in Nederland ons vastgoed verduurzamen, het betreft een woning met meerdere huurders. Kan je me wat vertellen over de afwegingen bij het verduurzamen van vastgoed?
Dear,
I plan on buying an HMO with EPC label D and am looking for financing. Can you tell me something about the upside of refurbishment for improving the EPC label to B or A and explain available retrofit scheme’s and mortgage advantages?
Dear Pete, thanks for reaching out!
Improving your energy label from D to A may qualify the property for discounted mortgage pricing, subject to lender criteria, of up to 0.25% per EPC band, alongside cashbacks of up to £2,000,- upon closing the loan.
The refurbishment capex expenditure can be financed at low to zero interest rates. Upgrading to EPC A increases the property’s base market value today by roughly the sum of the refurbishment capex and positions it to compound at the high end of market growth, as opposed to label D estates compounding at the low end. Naturally, borrowing capacity increases with higher market value, whilst premium EPC-housing qualifies for better LTV, both for acquisition and refinancing.
For cash flow assume a £ 50,- to £ 100,- monthly utility bill savings per suite, compounding annually. We generally consider 0.5 reduction in void months per suite due to the attractiveness of sustainable housing.
To summarize: Improving EPC allows for decreased mortgage interest rates while increasing property valuation (growth). Better rental prices with improved occupancy rate increases passive income.
Beste,
Wij willen in Nederland ons vastgoed verduurzamen, het betreft een woning met meerdere huurders. Kan je me wat vertellen over de afwegingen bij het verduurzamen van vastgoed?