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Exclusive: MAB partners with Effective Energy Group to encourage retrofitting

  • 24/06/2024
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Exclusive: MAB partners with Effective Energy Group to encourage retrofitting
Mortgage Advice Bureau (MAB) has partnered with Effective Home, part of Effective Energy Group, to support homeowners in improving their properties’ energy performance.

Clients will be able to access affordable retrofitting solutions that are expected to lower energy bills and potentially increase a property’s value over time. 

MAB said the partnership would open this possibility up to more people by allowing advisers to discuss retrofitting at any point in the homebuying and remortgaging journey. 

The broker firm’s new initiative, Resilient Homes, will enable its advisers and business partners to offer services that will address the demand for more sustainable homes. 

Advisers will introduce clients to Effective Home, which will carry out assessments to evaluate a property’s potential for energy-efficiency upgrades. It does this by generating tailored recommendations that clients can implement using Effective Home. MAB advisers will then be able to help clients with their financial needs to make their homes greener. 

Ben Williams, CCO of Effective Energy Group, said: “This partnership is catapulting MAB into an area that’s never been targeted before. It’s a milestone in making energy efficiency a viable option for all homeowners. Resilient Homes is market-disruptive by giving a different dynamic, as well as options, to customers who want to make changes to the energy efficiency of their property.

“Our mission is to provide practical and affordable energy-saving solutions, and this collaboration enables us to reach more customers than ever before, driving down carbon emissions and energy costs.” 


Engaging all clients 

Speaking to this publication at MAB’s Resilient Homes launch event, Ben Thompson (pictured), deputy chief executive of MAB, said: “Where we are expecting a product opportunity to be is purchase and remortgage fundamentally, but I think it is everything.

“But where we’re asking lenders to provide new products is remortgage. For instance, if you want to spend £15,000-20,000 retrofitting a medium- to large-sized home, you don’t just talk about a product end date, you’re talking about the opportunities to retrofit the property. So that’s an obvious fit.

“I think product will emerge as well, where if you’re a first-time buyer looking to borrow £200,000 to buy a £300,000 [home], you might be able to borrow £230,000, for example, to make radical changes to the property from an E rating to get it up to a C or a B.” 

Thompson said that this would be on “preferential terms” and then there would be a reinspection of the property to get a new EPC rating and the mortgage rate and loan to value (LTV) would reduce.

“I think how we’ll approach it is we’d like all advisers to engage all customers just on the subject matter. Those conversations could last two minutes through to an hour, depending on whether someone is interested, if it is the right time, etc.

“I think our responsibility is to help advisers to talk to all customers, and then whatever happens after that is down to what the customer is ready to do or feels strongly about. So, there are lots of opportunit[ies] and the market needs to, as I see it, continue the good work it’s done and make it great work by providing a broader set of products with the right pricing and criteria, and so we pull the whole thing together and start to realise some change.” 


Hesitation over benefits of retrofitting

Effective Home will produce a breakdown of cost savings, payback periods and any environmental benefits. 

When clients agree to go ahead with works, the Effective Home team will manage the installation of improvements and a further Energy Performance Certificate (EPC) assessment will be carried out to determine the changes made. 

Thompson said there was “caution around overpromise[s]” when it came to the “payback period” for retrofitting measures, which is how long it would take for the initial investment in retrofitting to be paid off.

However, he continued: “As a customer, I’d be more interested in if I’ve got an E- or F-rated property today and that becomes a C-rated property in a year’s time. Not only is EPC rating greater, firstly, you’ve got people who are looking at that as their second-most important [criterion] when choosing a house.

“Fundamentally, the value of the property is going to go up, you’ve got more demand for that type of property, so the delta between an A-, B- or C-rated property and D- to G-rated property is definitely marked. That’s what really interests me as a customer; if you spend £10,000, you might make £40,000.” 


Invitation to the mortgage industry 

Thompson said there was a challenge around education and awareness among advisers due to the frantic market and the time needed to understand various measures and their pros and cons.

“With the average adviser who maybe has been in the industry a couple years, they probably haven’t done much on this, so it’s our responsibility to try really hard to enhance their awareness of the whole subject matter so they feel confident they can have that conversation with their customer.

“If we do that with every adviser, they do [it] with every customer, that should multiply our effects and impact.” 

He said he wanted other distributors to follow MAB’s lead and “absolutely wouldn’t dismiss working with other people as well”.

“It’s a relatively open invite to engage with other parties if they want to work with us on this. I think the more momentum the industry gathers, the more products lenders provide and, vice versa, there [are] in the industry, and that helps us as well.

“What you really want is customers always coming in and saying: ‘look, I’m remortgaging in six months’ time, can you help me with this as well?’ That means that the awareness has sunk in, and more people doing that helps that,” Thompson added. 

He continued: “Firstly, I think this is quite a slow burn in the short term. For all the challenges around [the] cost-of-living crisis, awareness or a lack of what I call legislative urgency, so it’s going to be [a] slow burn, but there will be catalysts along the way.

“Where do I think we’ll be in two years’ time? I think just about all green products will be the cheapest within the lender’s range. Progress for me is them not being called green mortgages, and we’ve got a variety of solutions that cater from the small fixes to a property, like borrowing £5,000 on a further advance, right through [to] someone want[ing] to completely change a great big house in the country and spend[ing] £300,000. 

“You can do it at the point of purchase, the point of remortgage, point of product switch. It’s the evolution of product design through customer learning, so we’re designing the products that customers actually need.

“The final bit for me is we would always do events that cover this subject matter, because we care deeply about it, but it’s almost the novelty is gone, and it’s into [the] implementation phase, and it’s become the norm.” 


Everyone working at different speeds

When asked why there was divergence between lenders and the green agenda, as some were more ahead with product development than others, he said the “common drivers” would be “commercial metrics and system challenges”.

Thompson said: “I’ve got a lot of sympathy with those that think the payback isn’t there at the moment, because I do think it’ll be a slow start, but I think we’re slightly different. We have an obligation to do something under the ESG umbrella, and this is a very obvious, huge pillar under it.

“We have our feet held to the fire, quite rightly, by prospective and existing investors. What are we doing to really enhance our presence and make social good under the ESG umbrella? This is a brilliant example.

“We’ve got a natural, healthy pressure from that, as other listed businesses will do, and for different reasons, and mutuals would do as well. Then there’s a different selection of lenders who probably look more through a commercial lens: ‘do I get payback and profit and decent margin from those products with a lack of demand in the industry at the moment?’

“I fully understand why it’s difficult for them, but I’d encourage that more as seeing as a niche that will grow and carving out a name or a brand associated with first mover[s] in that space and really making a difference.” 

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