Thousands of homeowners face renovation bills of more than £10,000 to sell as a result of new Scottish Government energy rules.
Zero Carbon Buildings minister Patrick Harvie has said new regulations requiring houses to have an EPC energy rating of C or above will be introduced in 2025 – with full compliance expected by 2033.
But over half of Scotland’s housing stock is below a C rating and there are mounting fears of a major property scandal as the £33billion upgrade cost is pushed on to homeowners.
A Sunday Mail investigation has found banks are already refusing to give mortgages on some properties in anticipation of the stringent new rules coming into force.
Experts have warned thousands will be affected and that some modifications may not even make the property more energy efficient.
Meanwhile, one homeowner whose sale recently fell through because she didn’t have the appropriate rating said buyers and sellers were being “completely screwed”.
The 29-year-old council worker, from Dalkeith, near Edinburgh, found a buyer for her two-bed flat at the start of January.
But the sale hit the rocks in early March after a home report came back with an EPC energy rating of E.
The homeowner, who was forced to spend £2000 on a new heating system, said: “I was told the only way the banks would lend to the buyer is if we got the flat’s EPC rating to a D.
“It’s not clear why the banks asked for mine to be brought up to D rather than a C but mortgage companies are obviously getting ahead of the game – and my sale fell through because of it.
“I was told the only way to get to a D was to buy storage heaters from Europe. It cost £2000 for the heaters and installation and I lost the sale anyway.
“Basically buyers and sellers are getting completely screwed. It’s just bonkers.”
Research published in 2019 found that only 45 per cent of Scotland’s homes are rated band C or better.
Green MSP Harvie announced in October there will be trigger points for almost all buildings to meet band C, with one being when a house is put up for sale.
The rules will only apply to properties where it is “technically feasible and cost-effective” for them to reach C level but that cost has not been made clear.
Property expert Brian Gilmour, who owns letting agency Indigo Square, said: “It wouldn’t surprise me if mortgage lenders are nervous about handing a large amount of money on property that doesn’t have an EPC rating in line with regulations that will be enforced in the not too distant future.
“This is going to be a costly problem for a lot of people.
“In a typical tenement flat, the extra work to get to a C is going to cost around £10,000.
“Some of the recommended changes will not be possible – external wall insulation, for example, will not be feasible in a first-floor flat.
“The other options are going to be internal wall and floor insulation. This will often not make practical sense in a flat insulated by other flats around it and it could take up to 80 years for the cost to be made back through lower energy bills.
“The Government needs to be realistic and also consider the carbon cost of getting these older properties to a C rating.
“There has to be realism and pragmatism or people are going to face real problems.”
Harvie told MSPs the total costs of ending Scotland’s contribution to climate change from buildings emissions will be more than £33billion.
As things stand, the Scottish Government has pledged £1.8billion to help over the next five years.
Property lawyer Ross MacKay, of Edinburgh, added: “There is a lack of clarity and detail. We don’t know if it will be the buyer or seller that will be responsible for making sure properties have the appropriate rating, the timescale for dealing with it, how lenders will react or how surveyors will cover it in terms of valuation.”
Kate Davies, executive director of the Intermediary Mortgage Lenders Association, said: “Everyone understands that we need to reduce carbon emissions but there has to be a reality check on how that can be achieved, by whom and in what timescale.”
A Scottish Government spokesman claimed banks would be encouraged to offer “green mortgages”.
He said legislation to support the Heat in Buildings Strategy will be in place by 2025 “and will only apply to properties where it is technically feasible and cost-effective to do so”.
He added: “Whilst financial services are a reserved matter and mortgage products and offers a matter for individual lenders, we are encouraging them to offer incentives such as green mortgages.”
