Buy-to-let landlords are increasingly focusing on energy-efficient properties as new energy performance certificate (EPC) regulations loom. With proposed minimum energy efficiency standards set to take effect in October 2030, lenders are adapting their offerings to align with this shift.
Why Are Landlords Targeting Energy-Efficient Homes?
Landlords are increasingly attracted to properties with higher energy efficiency ratings due to impending EPC regulations. Paragon Bank’s recent half-year results indicate that £435.7 million of new buy-to-let lending was secured against properties rated EPC A-C, reflecting a growing trend towards energy-efficient homes. This shift is driven by the need to comply with the new minimum energy efficiency standards that will be enforced from October 2030.
What Are the Current Lending Trends?
In the first half of its financial year, Paragon Bank reported that energy-efficient homes accounted for 56.4% of its buy-to-let lending, up from 49.9% in the same period last year. This increase demonstrates a significant shift in landlord preferences, as they seek to future-proof their investments against regulatory changes. Overall, Paragon’s mortgage loan book grew by 2.9% to £14.1 billion, supported by £773.7 million in new buy-to-let lending.
What This Means for Landlords
The growing emphasis on energy-efficient properties means landlords must consider the long-term viability of their investments. With the new EPC regulations on the horizon, properties that fail to meet the minimum standards may face reduced demand and lower rental yields. Landlords should start evaluating their portfolios and consider investing in energy-efficient upgrades to maintain competitiveness in the market.
How Are Lenders Responding?
Paragon Bank’s proactive approach to energy-efficient lending highlights a broader trend among lenders adapting to the evolving regulatory market. The bank’s new business pipeline stood at £718.9 million at the end of March 2026, marking an 8.6% increase year-on-year. The strong credit performance of Paragon’s buy-to-let assets, with three-month arrears at 0.50%, suggests that lenders are confident in the stability of this market segment.
Frequently Asked Questions
What are EPC ratings and why are they important for landlords?
EPC ratings assess the energy efficiency of properties, with higher ratings indicating better energy performance. These ratings will become important as new regulations require minimum standards, impacting rental viability.
How can landlords prepare for the upcoming EPC regulations?
Landlords should evaluate their properties’ EPC ratings and consider making energy-efficient upgrades. Investing in improvements now can help ensure compliance and maintain rental income in the future.