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Net Zero targets could make millions of old homes unsellable

The Times

There are concerns that millions of normal homes will become unsellable unless owners improve their energy efficiency.

Homeowners with draughty properties risk being locked out of new mortgages as lenders have begun restricting deals for homes that are not energy efficient.

Paragon Bank’s new 3.99 per cent five-year fixed deal for buy-to-let landlords is one of the lowest on the market — but will only be available for properties with high energy efficiency ratings.

It is the first sign that lenders are getting ready for proposed government rules that will ban homeowners from renting out or selling inefficient properties — part of its plan to achieve its legally binding targets to combat climate change.

From April 2025 landlords will only be able to let to new tenants on properties with an energy rating of C and above, with the rules applying to all tenancies from April 2028. The likely knock-on effect is that fewer landlords will want to buy inefficient homes.

The Climate Change Committee, the government’s official advisory body, has recommended that all homes on the market should have a rating of C or above by 2028. It did not say what could happen to homes that did not meet that criterion, but mortgage lenders are being encouraged to reward homeowners with energy efficient properties.

Richard Rowntree from Paragon said landlords are facing a burning bridge. “These deadlines are rapidly moving towards us. It surprises me that more homeowners don’t have efficiency at the forefront of their minds.”

Anyone selling or renting a home must get an energy performance certificate (EPC), which gives a score of 1-100: a higher score means lower running costs. Anything scoring 92 and above achieves an A. Only 3-4 per cent of homes have an A or B rating. The lowest rating is G (1-20). All private rented homes must achieve at least an E (39-54). The average for a house in England and Wales is D (55-68).

New-build properties are likely to be rated C and above, but the situation is trickier for older homes, which might have a low rating even if they have doubled-glazed windows and some form of insulation.

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