Green Mortgages and EPC Ratings Explained | It may not come as a surprise that green mortgages are attracting growing attention across the UK mortgage market. This shift is driven by a combination of government targets, lenders’ responsibilities, and the long-term sustainability of the housing stock.
New-build properties are typically more energy-efficient than older homes. Many achieve high Energy Performance Certificate ratings due to modern building standards. However, most UK homes are older, and many have lower energy-efficiency ratings. Mortgage lenders are under increasing pressure from both the government and the Financial Conduct Authority to assess the EPC ratings within their existing loan books. All FCA-regulated lenders, regardless of size, are expected to work towards an average EPC rating of C across their mortgage portfolios by 2030.
Including new-build homes in lending portfolios can help lenders move toward this target. New builds frequently achieve EPC ratings of A or B, which can offset lower-rated older properties. As a result, many lenders are introducing new build-to-rent criteria and offering incentives through green mortgages. This raises an important question. Does this approach genuinely improve sustainability, or does it simply shift focus away from upgrading existing homes?
Why Energy Efficiency Matters to Everyone
The sustainability agenda is not designed to improve balance sheets or create attractive EPC charts. It exists to support the UK government’s target of achieving net-zero greenhouse gas emissions by 2050.
Housing stock in the UK accounts for around 40 per cent of total carbon emissions each year. Despite this, the average EPC rating for homes in England and Wales was band D as recently as 2019. This falls short of the long-term goal of bringing as many homes as possible to EPC band C by 2035. Focusing only on new builds does not address the wider issue. Improving the energy efficiency of existing homes may have a far greater impact over time.
Many lenders now offer green mortgages that include incentives such as lower interest rates or cashback. These products are usually available only to properties with EPC ratings of C or above. For homeowners, this makes it worth considering improvements before a future remortgage. You can explore how this may affect your options through our residential mortgage services.
What This Means for Buy-to-Let Landlords
For buy-to-let properties, EPC ratings are becoming increasingly important. From 2025, any buy-to-let property starting a new tenancy is expected to meet a minimum EPC rating of C. Existing tenancies are expected to comply by 2028.
This means many landlords will need to make energy efficiency improvements within the next few years. Properties that fail to meet the required standard may become unsuitable for letting, which could limit rental income and future lending options.
Landlords reviewing their portfolio should consider how EPC requirements may affect refinancing through buy-to-let mortgages.
Practical Steps You Can Take Now
The first step is to review your current EPC certificate and confirm the most recent rating. Newer certificates often include guidance on recommended improvements and estimated costs.
If your EPC is outdated, arranging a new assessment can clarify where improvements are needed.
Most homeowners and landlords will need to take some form of action. While grant funding remains limited, mortgage finance may offer solutions. As independent mortgage advisers, we can assess whether equity release, a further advance, or an additional secured loan could support property improvements.
Even if you are currently on a fixed rate, options may still be available. In some cases, breaking a fixed-rate early may be worth considering if it helps improve EPC ratings and protect long-term lending options. These scenarios should be assessed carefully.
For landlords, many are currently tied into five-year fixed-rate deals. This may leave only one opportunity before 2025 or 2028 to refinance and fund upgrades.
If a property does not meet the minimum EPC requirement at the time of refinancing, lenders may be unwilling to provide further financing unless valid exemptions apply. There is also growing discussion that lower EPC-rated properties may not experience the same value growth as more energy-efficient homes.
Reviewing your options early may help you avoid future restrictions and position your property more favourably in the market.
You can also speak to a qualified adviser through Connect Experts to understand how EPC changes may affect your plans. Use the Find Mortgage Advisers service to access local support.
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