For landlords, 2025 marks a turning point. Energy performance is no longer a future compliance issue — it’s an immediate financial one. The UK government’s roadmap toward higher Energy Performance Certificate (EPC) standards is already reshaping the buy-to-let (BTL) market, influencing valuations, lending appetite, and long-term investment returns.
While formal legislation requiring EPC C or above for new tenancies has been delayed, lenders, valuers, and tenants are not waiting. The direction of travel is clear: properties with poor energy efficiency are being discounted, while energy-efficient homes are commanding stronger yields, lower running costs, and preferential mortgage terms.
In this guide, we’ll examine what’s changing in 2025, how much common upgrades cost, and the finance options landlords can use — from green mortgages to bridging and capital-raising remortgages — to future-proof their portfolios without eroding liquidity.
EPCs were once a box-ticking exercise, but they’ve become a key valuation and lending factor. Even though the government has not yet legislated the mandatory C-rating, the private rental sector is already adapting voluntarily.
Lenders are tightening underwriting for properties rated E or below, particularly for higher-LTV buy-to-let mortgages. A number of high-street lenders now restrict loan amounts or impose rate premiums on non-compliant stock. Private banks, meanwhile, are incorporating EPCs into broader ESG frameworks that affect credit appetite.
From a valuation perspective, the shift is even starker. Surveyors increasingly apply a “green discount” to inefficient properties — a reflection of the potential capital expenditure required to bring them up to standard. This means that landlords who ignore energy upgrades risk both lower refinance valuations and reduced borrowing power.
The message from lenders is clear: energy efficiency is now part of risk pricing.
Upgrading a property’s EPC rating depends on its construction, age, and existing systems. For a standard Victorian or interwar rental home, the most common cost drivers include:
For a typical two- or three-bedroom rental, the average upgrade cost to move from EPC D to C ranges between £8,000 and £15,000.
While that’s a meaningful outlay, the long-term financial logic is strong. Higher EPC ratings can:
In the current environment, lenders are using green criteria not just to meet ESG commitments, but as a proxy for resilience — efficient homes tend to have more stable tenants and fewer maintenance issues, reducing default risk.
Lenders’ approaches vary widely, but the trend is consistent.
Mainstream banks such as Barclays, NatWest, and Nationwide offer modest rate discounts or cashback incentives for properties rated EPC A or B. Some will extend those benefits to C-rated homes, encouraging landlords to upgrade before the inevitable tightening.
Specialist buy-to-let lenders like Paragon, Shawbrook, and Precise are taking a more nuanced approach. They’ll fund upgrade costs through capital-raising remortgages or top-slicing models, using surplus rental income or personal affordability to support the case.
Meanwhile, private banks are factoring EPCs into portfolio lending — rewarding landlords who commit to energy upgrades across their holdings. For larger portfolios, they may even accept a phased compliance plan, lending against the aggregate EPC profile rather than penalising every sub-C property individually.
This evolution mirrors what we’ve seen in the green mortgage market, where sustainability has shifted from marketing narrative to a tangible underwriting criterion.
For a wider view of lender strategy, see UK Buy-to-Let Strategies in 2025 and Green Mortgages and Energy Efficient Properties.
Many landlords want to improve their properties but face a cashflow dilemma — particularly if they own multiple units. Fortunately, several funding routes can unlock capital efficiently.
1. Green Remortgages
Green mortgages are now offered by a growing number of lenders, rewarding energy-efficient properties with lower interest rates or cash incentives. Some allow additional borrowing specifically for energy upgrades.
For landlords already holding an EPC C or above, switching to a green product can produce immediate rate savings, freeing up surplus capital for further improvements.
2. Capital-Raising Remortgages
If you have equity in your property or portfolio, a capital-raising remortgage can release funds for refurbishment. This option works well where the property already meets rental stress tests.
It’s also an opportunity to restructure inefficient debt — consolidating older loans into one facility at a modern rate.
To learn more about timing such changes, read Is It Time to Remortgage? Signs to Watch in 2025.
3. Bridging Finance for Works
Bridging finance remains one of the fastest ways to fund upgrades, especially where works are extensive or properties are temporarily unlettable.
Modern bridging lenders routinely fund energy retrofits under light or heavy refurbishment terms, with loan-to-value ratios up to 75% and flexible interest servicing. Once works are complete and a higher EPC rating achieved, borrowers can refinance onto a mainstream buy-to-let or green mortgage at a stronger valuation.
For detail on how bridging is evolving, see Short-Term Property Finance: Your Options in 2025.
4. Portfolio Refinance or Second Charge
For landlords with multiple properties, a portfolio refinance can provide liquidity for upgrades across several assets simultaneously. Alternatively, a second charge loan on one property can finance improvements elsewhere — a flexible approach when timing is key.
To understand how these structures work in practice, read Portfolio Mortgages in 2025: Smarter Finance for Multiple Properties.
The narrative around EPC compliance often focuses on penalties — lost value, reduced borrowing, tougher regulation. But the more strategic landlords are already seeing it differently.
Properties upgraded now are positioned for premium yields in future. As regulation tightens, tenant demand will migrate toward efficient homes. Energy performance is becoming as important as location and décor in determining market rent.
Moreover, lenders will continue to reward compliant portfolios with lower margins and faster processing. The result? Reduced funding costs, higher capital efficiency, and improved resale potential.
In this sense, EPC improvement is not a regulatory burden — it’s a competitive advantage. Landlords who act early will not only protect asset value but expand borrowing capacity while their peers play catch-up.
Q1. Are EPC upgrade rules legally enforced in 2025?
Not yet. While formal legislation requiring EPC C or above has been delayed, lenders and tenants are already adjusting, making it commercially important now.
Q2. Can I use my buy-to-let mortgage to fund energy upgrades?
Some lenders allow additional borrowing through remortgage for improvements, while others may require separate refurbishment or bridging finance.
Q3. Are green mortgages genuinely cheaper?
In many cases, yes — though the difference may be modest. Green products often include cashback or rate discounts that improve total cost over time.
Q4. Will my property lose value if it has a low EPC rating?
Potentially. Valuers increasingly apply discounts to inefficient stock to reflect anticipated upgrade costs or reduced tenant demand.
Q5. Can EPC upgrades improve my borrowing power?
Yes. Properties with higher EPC ratings often attract better valuations, lower rates, and improved LTV allowances, all of which enhance funding options
At Willow Private Finance, we help landlords structure finance around energy efficiency. Whether you’re raising funds for retrofitting, refinancing a portfolio, or exploring green mortgage incentives, our whole-of-market access ensures the most efficient capital route.
We’ll assess your portfolio, model the impact of upgrades on valuation and rental yield, and structure the finance accordingly — from green remortgages to refurbishment bridging or second-charge lending.
About the Author
Wesley Ranger, Director at Willow Private Finance, has over 20 years of experience advising landlords, investors, and developers across the UK. He specialises in structuring efficient portfolio finance, bridging, and private bank lending. Wesley and the Willow team help clients future-proof their property investments by combining strategic finance with long-term planning around sustainability, valuation, and tax efficiency.
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Willow Private Finance Ltd acts as a mortgage and insurance intermediary and is authorised to advise on and arrange regulated mortgage contracts. The information in this article is general in nature and does not constitute personal financial advice under the Financial Services and Markets Act 2000.
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