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Green buy-to-let mortgage choice at record high

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Written by: Anna Sagar
29/03/2022
The number of green buy-to-let (BTL) mortgage deals on the market has increased from just four in March last year to a record 353 now.

Green mortgage deals provide incentives for borrowers with either a lower interest rate or an increased loan amount where they buy a green property (typically a new build), or renovate an existing property to make it greener.

The UK’s largest lenders, such as Barclays and Nationwide, have launched a wave of climate-change products amid criticism over the industry’s slow response to global warming.

But, according to specialist BTL broker Mortgages for Business, green BTL mortgages now make up 15% of products on the market.

It has recorded seven months of consecutive increases since August 2021, when there were 118 green mortgage deals on the market.

With a total of 353 green mortgages available in the buy-to-let mortgage sector, this is the highest ever recorded, with landlord borrowers now having more choice than ever before.

The broker added that limited companies also had improved green mortgage choices, rising to 244 deals this month, which is a fivefold increase on last year. Green limited company products made up 19% of all limited company products.

Gavin Richardson, managing director of Mortgages for Business, said that the growth in green BTL mortgage deals showed a “recovery in the BTL sector but also the willingness of lenders to innovate”.

He added that lenders were now focusing on greener products for landlords, partly due to the government committing to making Britain carbon neutral by 2050 and the consequent need to upgrade housing stock. Further, upcoming legislation around BTL properties and required EPC ratings are contributing to the increased choice for borrowers.

Richardson explained: “Given much of the UK’s ageing housing stock is very energy inefficient, making our homes a major source of greenhouse gas emissions. At 14% of the UK’s total emissions, housing has a greater carbon footprint than the farming industry, so there’s no question that improving energy efficiency is a critical part of tackling climate change.”

He added that the average bill for landlords to improve their properties’ EPC ratings ranged between £6,000 and £15,000. But its survey revealed just 38% of landlords could afford to invest in making their properties 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,” Richardson said.

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