The good news is that more and more lenders have included green mortgage products and incentives as part of their offerings this year, while Minimum Energy Efficiency Standards (MEES) have ensured that rental properties have a minimum ‘E’ EPC rating.
The announcement of a new Energy Efficiency Taskforce in Jeremy Hunt’s Autumn Budget statement was also promising, as this could help people upgrade the energy efficiency of their properties.
However, the ongoing economic turmoil this past year has sidelined the green mortgage market to an extent. The government, lenders and brokers will therefore need to take greater ownership and responsibility for its progress by putting green solutions at the top of their agendas.
Improve education
For a start, more needs to be done to educate owner-occupiers, buy-to-let landlords and brokers about the benefits of energy efficiency home improvements. While most homeowners are committed to carrying out green improvements to their properties, roughly two-thirds of them do not perceive energy efficiency refurbishments as having a real link to climate change and around a third didn’t know whether or not their property would comply with proposed legislation.
Moreover, Coventry Building Society’s own research showed that only half the landlords they interviewed were fully aware of the proposed EPC regulations.
There are also misconceptions around some home improvements, when it comes to cost of installation, return on investment and the environmental benefits alike. All of these factors need to align for everyone to see the benefit.
As such, lenders and brokers need to do more to educate both homeowners and brokers about the overarching benefits of implementing green home improvements, as well as how individual improvements can help reduce emissions.
Greater clarity regarding legislation changes and government grants
Even though a fifth of buy-to-let landlords plan to use government grants or funding to improve the energy efficiency of their properties, they have little idea what, if any, grants will be available and we don’t yet know when the government will forge ahead with its own proposed legislation.
This would include the proposal to raise the minimum EPC rating requirements to B and C from 2025 for new tenancies and 2028 for existing tenancies which is yet to be confirmed too.
Greater proactivity from the government – and innovation from lenders – is therefore urgently needed. The government must also take on the Climate Change Committee (CCC)’s recommendations and revamp the EPC framework, to emphasise reduced emissions over costs, so that lenders’ green propositions, brokers’ recommendations, and homeowners’ actions are more closely aligned with the desired environmental results.
Going forward, it will also be vital to introduce more green incentives for borrowers whilst also demystifying the regulations and processes around undertaking retrofits. Only then will brokers, homeowners and buy-to-let landlords be pushed to prioritise energy efficient home improvements, propelling the green mortgage market forward.
