In a speech at the annual UK Finance mortgage lunch, the trade body’s chief executive David Postings (pictured) said thousands of borrowers may not be able to afford the transition to net zero.
He cited the example of a friend who bought a 1930s property in Sheffield, worth £44,000, from the local authority.
Postings said that she would not be able to add £10,000 to her mortgage even if the option was there, as she would not be able to afford the payments. He also said she would not be able to afford upgrading her car to an electric one.
He added that uncertainty around the energy performance certificate (EPC) rating she would need to achieve on the property was still “subject to definition” meaning that work to improve the property may not be sufficient.
Postings continued: “You will all be thinking about your portfolios and your own environmental, social and governance (ESG) agendas. You will have regulatory and investor pressure to move to a greener book of business.
“I am not in any way saying the transition is not vital. But how do we, as an industry, avoid creating a problem that dwarfs cladding while implementing laudable public policy changes?”
Postings said UK Finance was planning on working with associate members to come up with “concrete, implementable ideas for government, regulators and industry” to ensure vulnerable customers were “helped and not excluded”.
He said it was key that industry actors did not “pat ourselves on the back for being greener” but in the process exclude significant numbers of people and negatively affect the feeling of security and confidence that property ownership gives.
“I don’t have the answers yet and I realise they won’t be easy to find but surely, we must try. We need a plan, or we risk sleepwalking into the sequel to cladding,” Postings said.
He added that he hoped “material progress” on this issue would have been made by the time its annual lunch takes place next year.
