Article originally published in The Intermediary July 2025 – page 41
This year has been a momentous one for us at Cotality, following our rebrand from CoreLogic. It’s a name that reflects the breadth of what we now represent: collaborative insight, deep industry understanding, and intelligence that supports the entire property ecosystem.
As such you would expect us to be working hard to support the industry reach net zero. Increasingly lenders’ understanding of climate and net zero compliance risk as it affects their balance sheets and origination appetite is becoming a priority. For lenders in the buy-to-let market, the need is now immediate, though for lenders of all hues it is very much on the agenda.
Temperature check
Government legislation is set to enforce a minimum energy performance certificate rating of band C on all properties starting a new private rental tenancy agreement from 2028 and for all private rented homes from 2030. The Future Homes Standard is set to come in in 2030, while new criteria will apply in EPC assessments from 2026 – though we are still waiting for the final detail on those. There is much still very much up in the air, yet lenders know that investing in systems and processes that are fit for a future we can see coming takes considerable time. Partly for this reason, we decided to commission independent research to find out exactly what lenders are feeling about it.
Our report, Temperature Check 2025: How prepared are buy-to-let lenders for future property risk? makes for interesting reading and reveals a number of key concerns that are broadly consistent across the market. Among the insights gleaned by gathering views from credit and risk executives across a range of specialist UK buy-to-let lenders, building societies and banks across the UK, was evidence that some buy-to-let lenders are currently laying the groundwork to ensure they limit their own exposure to “net zero risk” when approving new loans.
The reality is that loans being written today will still bein term when the regulations change – raising several questions when it comes to regulatory compliance. How lenders are choosing to approach this varies across the market.
Our research found that some lenders plan to integrate with more “dynamic data sources” for new buy-to-let lending and refinance to help modernise how they assess property-level environmental risks and energy performance.
The research highlighted a number of potential sources of data, including:
- Smart meter data, which can provide near real-time insights into actual energy consumption patterns
- Half-hourly electricity usage and pricing data, available to suppliers and aggregators with consent, offering fine-grained energy profiles
- Weather and flooding data from the Environment Agency and the Met Office
- Satellite and aerial imagery for monitoring land movement and surface water
- Open geospatial datasets from Ordnance Survey and local authorities
- The government energy performance certificate database, and
- Property-level retrofit and building improvement records, where available, from local councils or industry schemes.
However, some lenders have not yet fully worked out how net zero deadlines will affect their future lending appetites. When we launched the report in June, we held a private event at Bletchley Park, home to the Second World War codebreakers and birthplace of Alan Turing’s groundbreaking work on early computing. We were honoured to be joined by key representatives from lenders and valuation firms, who gamely joined in a spirited discussion around the research.
While it emerged that all lenders want to act to mitigate the impact of climate change, starting with the climate risk sitting on their own loan books, ongoing regulatory indecision at government policy level is holding them back.
Critical work
As a result, lenders and valuers in the audience warned this could lead to intense competition to lend against EPC band A, B and C private rented homes within one or two years. Indeed, as we have seen in the first half of this year, mortgage rates are incredibly competitive – in buy-to-let just as much as in residential.
The research covered other ground too, including a broadly held concern that well-intentioned environmental policy changes could lead to some very serious social consequences. There was genuine worry that moving too quickly to force landlords to improve or move their property portfolios without a workable strategy to fund it would mean hundreds of thousands of tenants could lose their homes.
The need to work closely with those in the social housing sector was raised as “critical” in order to avoid negatively impacting the provision of homes for those living in rented properties that will become unlettable after 2028 to 2030.
Lenders are clearly motivated to play their part in tackling climate change, beginning with the environmental risks tied to their own mortgage portfolios. While a looming regulatory deadline is driving urgency, our research shows that many lenders are struggling to make the progress they’d like—largely due to gaps in data and limited access to reliable scenario modelling.
The good news is that solutions do exist, and lenders are exploring a variety of strategies. But what our research also made clear is that reaching net zero is far from simple. Thankfully, we are ready to help with the solutions the market needs.
The full report is available on request.
Contact Richard Cobb - marketinguk@cotality.com
