Discussing the findings of the lender’s Tomorrow’s Homes report, Michael Taylor, head of retail green finance at Santander UK, said now was “a really exciting time for mortgages and housing”, adding: “This is absolutely the biggest challenge to UK housing in my lifetime. How do we decarbonise homes? I’ve not seen a challenge on a scale like this before”.
In its report, Santander suggested incentives and consumer support would encourage people to make green upgrades to their homes.
Speaking of the lender’s recommendation to give people a stamp duty rebate for making sustainable improvements, Taylor said this would address the concern people have about making a return on their investment.
He added: “One of the barriers we hear from consumers is ‘I don’t want to spend £15,000 putting a heat pump into my property because I might move in two or three years’ time and somebody else will benefit from that’.
“At the point you come to sell your property, if there’s an incentive like a stamp duty rebate, that would make it easier for the customer.”
When it came to green mortgages, Taylor said “most people don’t really know much about [them]”, so it helped to engage with customers more broadly on how they could benefit from greener upgrades.
Relevant energy-efficiency lending solutions
He said when it came to upgrading homes, Santander’s focus was on its existing customer base, not necessarily new acquisitions.
Taylor said inefficient homes affected all 14 million of Santander’s retail customers, so committing to net zero was “absolutely the right thing to do”.
He said the report gave the bank insight that would help with the development and proposition of products that would be “relevant” to people.
This could look like a product that links people directly to the supply chain, providing bespoke home reports upfront and potentially unsecured lending or savings products, Taylor said.
The lender currently offers support on energy efficiency through its website and the My Home Manager app. The app was launched in 2022 in partnership with Countrywide Surveying Services and allows customers to check their property’s EPC rating, book home fixes and repairs, create checklists for homemoving and compare broadband and TV deals.
The app has supported 15,000 people so far, and Taylor said this was a success, as it had been done with little campaigning.
He said the lender wanted to “take that to the next level and build a more digital end-to-end journey”.
Santander has a product launching this month, which will have a validation process at the end so a customer can get their home reassessed once work is complete to demonstrate the improvements made.
This will be available to Santander’s 14 million customers and assess the properties they live in.
Taylor said there would be targeted campaign messaging to “reach out to customers and try to gain their interest based on their personal information to raise awareness of what we can do to support them”.
Broker observations mirroring report findings
Taylor said the feedback Santander received from brokers was similar to what the research found, further highlighting a need for more access to educational resources.
“We’re working very closely with a couple of brokers to understand what their clients are asking for and what gaps they are seeing in the market. That’s something we’re looking to do over the next few months; it’s next on our priority list,” Taylor added.
He also said brokers needed tools to feel “comfortable and confident” to have a conversation with clients about energy efficiency.
Santander offers a bespoke home energy plan that can help both brokers and customers to see the recommendations specific to their property.
He said that, where borrowers do want to take action, “we will have some new lending products that will support customers if they need borrowing to do that”.
Energy efficiency firmly on government’s radar
The Tomorrow’s Homes report made a number of suggestions to the government, including tax incentives and financial support for low-income households to go towards retrofitting.
Taylor said the government would play a key part in driving this forward, but decarbonising homes would have to be a “collaborative effort” between the banking and construction sectors, as well as energy providers and green tech firms.
He said addressing the 20% contribution to CO2 emissions coming from residential housing would help the government reach its 2050 net zero goal.
Existing schemes and incentives should be expanded to have a greater reach, Taylor said, and homeowners needed to be equipped with education and awareness on what was trying to be achieved and their role in this.
“One of the things that we were calling for is for the government to sort of aggregate that information. How can we get it into a single place or an online tool that will make it much easier for homeowners, landlords and tenants to be able to access that information?” he added.
He said the government’s original net zero targets posed a challenge to households, as the supply chain was not ready to meet the demand required to meet the deadline at the time.
Although the reaction to the government removing the EPC deadline gave the impression it was softening its approach to reach net zero, Taylor said there was still a lot of “interesting dialogue” and active discussions with the financial services sector.
Santander is actively engaged with the government on this issue, Taylor added.
He continued: “It may appear that they’ve taken their foot off the gas, but behind the scenes, those conversations are still very much progressing about how we can really work together to support the decarbonisation of the UK.”
