Bridging loans help landlords with low energy efficiency properties
New regulations to be introduced in April 2018 stipulate that owners of rented commercial and residential with energy efficiency ratings of less than E cannot issue new tenancy agreements until the energy efficiency has been improved.
Landlords with old buildings with the lowest energy efficiency ratings of
F and G will be prevented from renting them even if a tenant is willing to move in. Installing insulation, double glazing and energy efficient heating systems can cost several thousand pounds. Bridging finance can help by providing short-term loans to help pay for upgrading.
Some lenders may refuse mortgage applications from landlords for low energy efficiency buildings. A bridging loan can be used to improve the building so that it qualifies for a commercial mortgage.
Though the new rules have been known about for a while, not every landlord is knowledgeable about them. Landlords with older buildings need to check their energy efficiency certificate. Lenders and brokers can advise landlords if they want to purchase older buildings or improve their existing low energy efficient buildings.
Even if a building has an E rating, landlords can improve energy efficiency even higher. High-energy efficient buildings cost less to heat, and this can be an incentive to attract new tenants.
Some investors are looking to purchase low energy efficient buildings at auctions where they can go at low prices. They can use bridging finance to fund energy efficiency improvements that add value to the property to either sell for a profit or rent.