Speaking at the Equity Release Council’s Equity Release Summit this week, Hansen Lu, senior economist at Aviva, said: “We’ve barely scratched the surface in terms of what’s possible with it.”
He said green lending in the equity release sector had “a lot of promise” and the ability to encourage people through its access to customers and distribution networks.
Jack Wilkinson-Dix, policy manager for Wales at Energy Savings Trust, said there was “a lot of interest in green equity release” and said pairing it with impartial expert advice was “integral to move people towards selecting these products”.
Lu said lenders needed to make the process easier for homeowners and remove some of the worries that changes will improve the energy efficiency of a property as promised.
Tom Kenny, pricing and underwriting director at Just Group, said: “There has been very limited product development. The three products I can think of that are out there have been launched with the purpose of supporting green equity release. That’s really scratching the surface. The challenge is making sure the adviser proposition provides them with the tools and information they need to help customers understand the benefits.”
He said one of the barriers was the time it took for these renovations to start paying for themselves, particularly for people who made upgrades for financial reasons, such as to lower their energy bills.
Borrower help and a consistent approach
Kenny said the sector needed to help people make green renovations and find trustworthy tradespeople who would do the work to a good standard.
He also said the industry should get better at recording its lending footprint.
Kenny said: “For green finance to really work we need to be able to measure the contribution that these mortgages are making to the carbon footprint of these properties.
“That’s one of things we don’t have at the moment… which is a consistency of approach.”
He added: “There aren’t many lenders that require an EPC certificate so that automatically means that we’re not really measuring the impact that we’re having on people’s homes.”
He said only 40 per cent of homes had an EPC, “so if we’re not requiring it as part of our new business process how can you possibly know what impact you’re having?”
Kenny said measuring the impact of what equity release was being used for after lending would also be beneficial.
