Even though the weather in the early part of July has been somewhat changeable and is expected to be so for the rest of the month, there’s no getting away from the fact climate change is impacting the UK in a noticeable and tangible way.
For instance, the Met Office recently announced June 2023 was the hottest month on record for the country, with an average mean temperature of 15.8°C, the highest in a series since 1884, and every single country within the UK also reported June as its warmest.
June 2023 didn’t just inch past the previous record, it absolutely smashed it — up 0.9°C — where the three previous Junes were separated by just 0.1°C.
This shift in our weather patterns with summers becoming hotter, clearly has serious implications for UK society, the way we live, and how we might cope with extended periods of heat.
I think we might all agree that UK infrastructure does not currently work well in any kind of weather extreme — heat is no different.
It will not need me to point out the UK housing stock has to be a primary concern for all of us, especially when you consider we have vast swathes of homes built during the Victorian period when such extremes were not a regular part of our weather cycle.
Of course, history tells us there would always be a year which stands out as an outlier, but they tended to be generational. Now, for example, we are seeing this level of heat every single year, or we are seeing storms, floods, etc, every single season in some parts of the UK.
The somewhat positive news is that there is a movement of sorts to address how our housing copes with this, not least the energy efficiency of our homes across all seasons.
Currently, we tend to have homes which are well-insulated for cold winters but not exactly brilliant at keeping us cool in hot summers.
Unfortunately, as we all know, the onus — at least initially — has been put on landlords and their BTL/PRS investment properties to try and secure higher energy-efficiency standards.
The problem being, of course, that no-one quite knows what the deadline put on all PRS properties being EPC level C or above is likely to be, with the current suggestion being 2028.
What is however clear here is the need for, at the very least, an ongoing assessment of a landlord’s property, particularly the EPC, and certainly at times of refinancing, a strong discussion around whether now might be the time to carry out work on the property, if it currently falls below a level C.
The reasons for this are simple — it makes the property more energy-efficient which will appeal to tenants in terms of saving money on energy bills but there are also a range of mortgage products only accessible to those landlords with properties at C and above.
These come with slightly cheaper rates which — given the current rate environment — can only be seen as a good thing in keeping mortgage payments down.
Green BTL products have tended to focus on existing A-C-rated properties, and at Foundation we have a range of products across both our F1 and F2 tiers, plus specific green products for standard HMOs, large HMOs and MUBs, and short-term lets as well.
These are all five-year fixes plus we have two-year discounted variables, which might well appeal to those landlords who are waiting to see how the market might respond over a shorter timescale, given they come with no ERCs.
Even though 2028 does still feel like a long time away, we should not forget that either this, or the next government, might decide to bring these measures in sooner.
We know that a general election is likely before the end of 2024, and if we have, for example, the Labour Party forming the next government, it might well decide on a different timeline and potentially a higher minimum standard.
We know that large swathes of the current PRS property stock have EPCs below C, and there seems like no time like the present for landlords, and their advisers, to be considering what is required to improve this, what funding might be deemed necessary, and of course, the benefits of doing this now rather than later.
Plus, let’s not forget the tenants in all of this. We are still going through a period when utility/energy bills are much more expensive than we have all been used to.
Properties which are energy inefficient are less attractive to tenants, plus of course, nobody wants to live in a home which is too cold in the winter and far too hot in the summer.
We have to respect that our weather is changing, and we have to help provide the properties that mitigate against such extremes; landlords are at the forefront of this, and we as both advisers and lenders can help them and their tenants, get to a much better and more comfortable place.
