THE ‘GREEN’ MORTGAGE MESSAGE IS SPREADING
GOOD IDEAS TEND TO SPREAD FAST – AND THIS SEEMS TO BE THE CASE WITH THE CONCEPT OF BRINGING ENERGY EFFICIENCY TO THE HEART OF MORTGAGES.
Earlier this year we looked at how LENDERS, a project involving Energy Saving Trust, BRE, Nationwide and others, is looking to find ways to bring accurate projections on energy bill costs into mortgage calculations.
Now, a continent-wide initiative, The European Energy Efficiency Mortgage, has launched, aligning some big players in lending, building and energy. It is looking at energy efficiency’s links to a reduced probability of default on payments – something that ultimately lead to more attractive lending rates offered. There will also be an exploration into the effect of energy efficiency measures on property value.
Efforts to tighten links between energy and the economics that influence consumer choices are to welcomed – especially on this scale. There is a groundswell of opinion growing that the energy performance of buildings is an absurd anomaly in the financing of their purchase.
Making the most energy efficient homes even more attractive, and providing a push to take action for those that own cold, leaky properties is absolutely vital if we’re going to get anywhere near tackling domestic greenhouse gas emissions. The UK is a particular target area, with housing responsible for a quarter of emissions.
A BROADER PUSH TO OVERHAUL BUILDINGS
The Paris climate deal appears to have hardened a resolve in a number of industries to ensure the financial parameters are in place to make a telling effort on tackling energy use in buildings of all kinds. 42 representatives of the building sector recently wrote to EC President Jean-Claude Juncker calling for a clear vision to 2050, suggesting that aiming for ‘near zero energy’ buildings by this date should be an objective.
Getting through to the private home owner has generally proved a tougher job than convincing businesses with large commercial property portfolios – and potentially huge accumulated cost savings – that it’s in their interests to consider investing in the fabric of their buildings. But even on the home front, the savings can be enough to make a telling difference to financial models, and how they’re sold to customers.
NEW IDEAS FOR HOME ENERGY FINANCE
As well as mortgage changes, there have been other financial incentives mooted in recent months to encourage upping the importance of energy efficiency in home buying.
The Policy Exchange think-tank has suggested that higher rates of stamp duty could be paid on properties with poor energy performance, so increasing the incentive for householders to explore options like insulation.
Another report from Bright Blue has suggested a ‘Help to Improve’ loan along the lines of the ‘Help to Buy’ scheme for more extensive improvements like cavity wall insulation and solid wall insulation, as well as ISAs where the government would top up savings made for home improvements. It also suggests that homes should meet a minimum Energy Performance Certificate (EPC) rating before they are allowed to be sold.
With both of these bodies aligning with the Conservatives, it will be interesting to see whether these ideas are adopted as the government clarifies its energy efficiency agenda.
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