Green buy to let mortgages allow borrowers to get a better deal when they borrow against a property with better energy efficiency. Whether you qualify for a green buy to let mortgage will depend on the energy performance certificate (EPC) rating of your investment property.
Environmental impact and improvements to our carbon footprint are topics on everybody’s lips right now, and the property market is not immune to this area of interest. Mortgage lenders are increasingly interested in a property’s energy efficiency when considering applications for funding.
At the time of writing, legal restrictions surrounding energy performance on buy to let properties are comparatively lax. However, this is set to change, with regulations scheduled for 2025 demanding higher energy efficiency on all tenanted properties.
To encourage landlords and property developers to brace themselves for these adjustments, with a green buy to let mortgages stepping outside the realm of rare specialist products and becoming increasingly prominent – with incentives offered to borrowers to make an eco-friendly property an appealing investment.
What is a green buy to let mortgage?
Green mortgages are a comparatively recent addition to the property market in the UK, first introduced in 2021, and can be acquired on a buy to let basis as well as for a residential home.
Put simply, a green buy to let mortgage is a loan taken out on a home with an Energy Performance Certificate (EPC) rated between A and C, though some high street lenders reserve these products for an EPC rating of A or B.
An EPC can be found in every home and will contain two pivotal pieces of information – the property’s existing EPC rating, and a potential rating if adjustments are made. The grade assigned to your property will break down as follows.
|A||92 – 100 (very high energy efficiency with low running costs)|
|B||81 – 91|
|C||69 – 80|
|D||55 – 68 (the average rating for most UK properties)|
|E||39 – 54|
|F||21 – 38|
|G||1 – 20 (very poor energy efficiency with high running costs)|
Green buy to let mortgages are a worthwhile consideration for any aspiring landlord, as the terms of these loans are invariably preferable to an equivalent property with a lower EPC rating.
While you may need to pay to make some improvements to a property before you qualify for such a product, this work can pay for itself multiple times if you remortgage a property on these grounds.
Your monthly payments will theoretically be lower as you may be offered a preferable interest rate on your remortgage. Energy-efficient properties can attract a higher rental yield as tenants will pay less on their utility bills and may be willing to spend more on rent.
Perhaps more importantly, the law surrounding EPC ratings on buy to let property is changing. As of 2025, all properties rented to paying tenants must have an EPC rating of C or above. Preparing for a green buy to let mortgage now will help you remain one step ahead of the game.
How do I qualify for a green BTL mortgage?
As discussed, to qualify for a green buy to let mortgage, the property you plan to rent to paying tenants must have an EPC rating of A or B (or, in some cases, C.) This may sound like a simple goal, but the median EPC rating for property in England and Wales is D. This is why green mortgages are a separate product.
If you purchase a buy to let property, this EPC rating must be in place before applying for the loan. Promising to make improvements on a home after the event does not entitle you to this preferential product, no matter how sincere your intentions may be.
One exception to this rule is purchasing a new build property you plan to rent. You will not need to wait for the building work to finish before applying for a mortgage; a Predicted Energy Assessment (PEA) will be considered sufficient evidence.
How does energy efficiency impact buy to let mortgages?
Governments and corporations worldwide are under pressure to reduce their carbon footprint and improve energy efficiency while reducing waste. The property market is no exception, so mortgage lenders are attempting to encourage homeowners and landlords to increase their efforts in environmental impact.
An energy-efficient property is considered a cost-effective home for tenants, which will not go unnoticed by mortgage lenders. If the building you aim to rent out has a superior EPC rating, you will likely attract paying tenants.
Your application is likelier to be accepted if you have an EPC rating of D or higher – and as we have mentioned, taking things one step higher will potentially qualify you for a green buy to let mortgage.
This does not necessarily mean that a buy to let property with a lower EPC rating will never qualify for a loan. By law, E is the lowest energy efficiency rating that a tenanted property can hold. Renting a residential property with an EPC rating of F or G is illegal.
Ergo, if the building has a rating of E, a mortgage lender may still lend you the money – but your interest rates may be higher as the property is considered a higher risk, and recommendations may be made to improve performance.
Energy performance certificate regulations
EPC ratings operate under the auspice of the Energy Performance of Buildings (England and Wales) Regulations 2012. A certified Domestic Energy Assessor (DEA) must complete an Energy Assessment Survey (EAS.) An EAS will be valid for 10 years. Based on this survey’s results, a property’s EPC rating will remain static or be upgraded or downgraded.
If it has been over 10 years since your last EAS on a buy to let property, a new one only needs to be booked if you plan to sell the property or enter into a new rental agreement with different tenants.
At the time of writing, failing to have an active EPC or renting a home with an EPC rating of F or G will result in a fine of up to £5,000 from your local authority. As of 2025, failing to meet the minimum EPC rating of C will lead to a maximum penalty of £30,000.
If you have made adjustments to a buy to let property in an attempt to improve energy performance, you do not need to wait a decade for the next EAS – this can be arranged at any time upon request.
Just be aware that you’ll need to give existing tenants at least 24 hours notice that a DEA will be visiting and clarify that this assessor needs access to all parts of the property. Tenants are not permitted to refuse permission for this, and the survey will usually take between 30 and 40 minutes.
How can I make my property more energy efficient?
Investing in energy performance enhancement can seem daunting, but it will be a worthwhile investment, given the changes coming down the pipeline.
A property’s energy performance can be improved in a range of ways, from minor changes with minimal outlay to significant tasks. Approaches to consider include:
- Switch halogen lightbulbs to LED alternatives. These cost more upfront but last almost fifteen times longer and drain up to 90% less power.
- Seal any draughts in your home. Windows and doors are the likeliest culprits here, but take a look at letterboxes and keyholes, too – they may benefit from an upgrade.
- Insulate your hot water tank or upgrade to a water cylinder, which is typically more energy efficient.
- Assuming your property is not a listed building, upgrade single-glazed windows to double- or even triple-glazing.
- Upgrade to solar power by installing panels on your roof if this is financially viable.
Above all, insulate wherever possible. This means adding insulation to your property’s walls, ceilings, and floors. This is often referred to as the “fabric first principle” – heat is rapidly lost from any surface that is not covered.
Who can apply for a green buy to let mortgage?
If you are interested in taking advantage of a green buy to let mortgage, let’s summarise the three core criteria for such a loan.
- You must be aged 18 or over.
- The property must have a qualifying EPC rating of A, B, or in some cases, C.
- You must prove that you can afford the mortgage repayments, pay a deposit on the property, and pass a credit check.
Some lenders only offer green buy to let mortgages on properties built over 10 years ago. This is an attempt to avoid leaving older properties uninhabited as they are no longer suitable for rent.
Keep reading – Bad credit buy to let mortgage.
Do green BTL mortgages have better interest rates?
Yes, a green buy to let mortgage will typically attract a preferential interest rate. How much you need to pay will still depend on a range of factors, including the deposit you can lay down on the property upon application, and your credit score. If you are considered a high-risk borrower, a green mortgage will not change this. All the same, a green buy to let mortgage can be much cheaper in the longer term than a traditional mortgage. Barclays Bank, for example, currently offers a green buy to let mortgage against a 25% deposit at an interest rate of approximately 1.99%. If the property has an EPC rating of C or lower, this interest rate increases to 2.09%.