As for most lenders, the majority of loans we provide for our buy-to-let (BTL) landlords are for properties that have changed hands at least once. This is hardly surprising as there are more second-hand properties than new-builds for sale.

But BTL investors do purchase new-builds. Over the past 17 months, 11% of our loans have been for newly built properties.

One of the advantages of a new-build is it will invariably have an Energy Performance Certificate (EPC) rating of B. An EPC has two parts. The Energy Efficiency Rating (EER) estimates energy use such as fuel costs, and the Environmental Impact Rating (EIR) is based on carbon dioxide emissions.

We launched green mortgages in June. Already, around 10% of applications are for green products

Government figures for the third quarter of 2021 show that 55% of existing homes were rated D to G based on EER and will have higher fuel bills. But even more homes (65%) were rated D to G on EIR, so they will release more carbon dioxide into the air.

However, new-build homes are more energy efficient, with around eight out of 10 having an EPC rating of B, while 96% are rated between A and C.

It’s not just recently built properties, either. Office for National Statistics data shows that homes built after 2012 are more likely to be rated B. Properties built before 1900 average an E rating.

All BTL lenders are required to ask for the EPCs of the properties they lend on

Most existing housing stock, around four in 10 properties, sits in EPC band D. This is reflected in our own mortgage book and is closely followed by loans on properties rated C.

All BTL lenders are required to ask for the EPCs of the properties they lend on, which must be at least an E rating. We cannot legally provide a mortgage on properties with an F or G rating (unless an exemption has been applied for and approved).

This is such an important issue that the Bank of England now asks banks to report their residential and commercial properties split by EPC rating, and to estimate this where no EPC is available.

The EPC data allows us to build an accurate picture of the energy efficiency risk within our mortgage portfolio. We also need this information for our securitisation programmes.

The Bank of England now asks banks to report their residential and commercial properties split by EPC rating

If brokers know the EPC rating of the property their client is buying, they can access green mortgages, which offer a discount off the interest rate for properties rated A, B or C.

We launched green mortgages in June. Already, around 10% of applications are for green products.

Paul Brett, managing director, intermediaries, Landbay