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Stop lenders offering mortgages on low EPC-rated homes, MPs told

  • 13/03/2019
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Stop lenders offering mortgages on low EPC-rated homes, MPs told
Banks could be regulated to not offer mortgages to properties with the lowest energy efficiency standards or to offer bigger loans to borrowers improving the efficiency of their homes, MPs have been told.


The Business, Energy and Industrial Strategy Committee was also told the Treasury should consider variable stamp duty levels dependent upon the efficiency of the property.

And tighter regulations are also needed for the private rented sector where some of the least efficient housing exists.

Ed Matthew, associate director of E3G, told the committee that banks need to be regulated if the government wanted them to take supporting energy efficiency seriously.

“You could get them to bring up the level of Energy Performance Certificates (EPCs) within their housing stock,” he said.

“You could regulate to say you can’t, for instance, provide mortgages for F- and G-rated properties.

“So there’s different things you can introduce which would help to focus minds.”

One such option included a scheme in the Netherlands where banks have to offer a higher mortgage to people making their home energy efficient.

“You could regulate them to say you have to provide a certain level more mortgage if people are renovating to improve the energy efficiency, and perhaps more so if it’s to a very high level of efficiency,” he added.


Sell homes at EPC band C

Matthew also highlighted that there needed to be a clear, stricter long-term goal for the country as a whole.

“We need a clear timeline for regulation to take homes up to EPC band C just as fast as we can,” he continued.

“That’s critical for driving demand.”

He noted that although it might seem harsh to impose this on people selling their property, it was surprisingly popular in surveys completed.


Variable stamp duty

The need to get banks involved in supporting improved energy efficiency standards within properties was echoed by energy supplier Eon.

However, Eon CEO Michael Lewis also suggested several other options.

“We would like to see variable stamp duty depending on the EPC standard, it seems like such an obvious thing,” he said.

“I suspect it was felt to be a cost to Treasury but it doesn’t have to be that way, you can make it revenue neutral.”

Low or zero VAT on energy efficient products and services, and local authority revolving loans for cheaper properties where stamp duty breaks would not have an effect were also suggested.


Tighter building regulations

The need to have hard targets and to stick to those targets was also highlighted by Lewis, particularly in the new build sector.

“The long term perspective and long-term targets are important,” he said.

“And ever-tightening building regulations to get there with the flexibility for developers to decide exactly how they deliver the outcome, so you can innovate around those targets – that’s what we need to see.

“For the private rented sector we also need tighter standards, but for owner occupiers we need financial incentives,” he added.




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