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Monmouthshire BS leads green mortgage affordability scheme

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  • 30/06/2020
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Monmouthshire BS leads green mortgage affordability scheme
Monmouthshire Building Society is leading a research project to pilot green mortgages which will recognise energy efficiency in affordability calculations.

 

The Valuer project is made up of the society, the Royal Institution of Chartered Surveyors (RICS), Rightmove and zero carbon homebuilder and sustainable energy service provider Sero. 

The project will launch new green mortgages and additional borrowing products to new build low energy homes in Parc Eirin in Tonyrefail and the Eastern High development in Cardiff, which include green features installed and managed by Sero Energy. 

Monmouthshire will be the first UK lender to implement the findings from the 2015 Lenders project, which found that lending to energy efficient homes with lower bills could increase mortgage sizes by as much as £12,000 compared to less efficient homes. 

As part of this, the mutual will adapt its affordability calculator to accurately reflect home energy bills. 

New purchasers will be offered the pilot mortgage products which includes assessments of energy efficiency and other considerations. It will also be available to borrowers already living in homes in the South Wales area who are looking to make retrofit energy improvements. 

The team will monitor the uptake of the products as well as property prices in the pilot areas to examine if certain features have any impact on value so this can be reflected in future home valuations. 

 

Changes to valuations

Rightmove will include ‘green’ information to its Surveyor Comparator Tool using energy performance certificates (EPC) and energy efficiency information to support surveyors to compare and value ‘green’ features.  

Rightmove will also use analytics to bring green features to its automated valuation model (AVM) to understand their impact on value. 

RICS will use the findings to make potential changes to the existing guidance it issues to it members. 

The project has been funded by the Department for Business Energy and Industrial Strategy, Green Home Finance Innovation Fund, and is supported by the Green Finance Institute. 

Dawn Gunter, chief operating officer from Monmouthshire Building Society, said: “Despite the growing concern around the climate emergency and the widespread acknowledgement that we need to decarbonise homes – currently there is a lack of understanding within the industry about how we put a value on low carbon homes, making it challenging to support members who are buying or looking to adapt their existing property.  

“As a member led mutual, we are committed to leading the way in helping bring about this change and are looking forward to getting this pilot off the ground, which we are confident will be a catalyst for real change in the industry moving forward.” 

Tim Bannister, director of data services at Rightmove, added: “Enabling property valuers to assess the value of low carbon homes is going to become increasingly important over the coming years with a growing focus on energy efficiency.   

“Developing tools to help identify low carbon features and present these to property valuers is clearly going to be a key part of this overall jigsaw.” 

 

 

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