Trade body UK Finance is urging the government to implement a strategy to drive demand for green home improvements, as more than half of homeowners say heat pumps are too expensive.
In a report entitled Unlocking Demand for Green Home Finance, UK Finance calls for a combination of targeted policy measures, public information campaigns and advisory services.
The trade body claims this approach will encourage homeowners, landlords and housing associations to retrofit their properties and take advantage of government grants for green home improvements.
UK Finance reports high costs for heat pumps
The report draws on YouGov research showing the attitude of UK consumers towards heat pump technology. The UK needs to install around one-and-a-half million heat pumps per year by 2035 to meet carbon reduction goals, but current consumer adoption rates fall short of these targets.
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According to the research, 54% said the main barrier to getting a heat pump is the high upfront cost, while 44% said they would switch if they were provided with a clear idea of the savings in running costs.
UK Finance argues that encouraging green home improvements requires more than financing and that the current government green home grant scheme isn’t enough to incline homeowners, landlords and housing associations to make changes to their properties.
UK Finance pushes nine-point plan
The trade body recommends nine actions for the government to embed in its upcoming Warm Homes Plan, a green home improvements initiative designed to lift over a million UK households out of fuel poverty by 2030:
- Establish a government-led body to drive collaboration across key stakeholders
- Provide certainty for firms involved in retrofitting properties
- Launch a public awareness campaign with independent guidance to counter misinformation
- Provide grants, subsidies and a coordinated plan to train sufficient tradespeople
- Rebalance electricity and gas prices through adjustments to levies
- Deploy government funding to enable lower-cost green home lending
- Maintain and expand grant programmes to support green home improvements
- Set clear long-term expectations so households and firms can prepare
- Update energy-efficiency metrics for accurate property performance and consistency
Meeting targets for green home improvements
Ian Bhullar, director of sustainability policy at UK Finance, said: “To meet our ambitious targets on greening the UK’s housing stock, we need to drive demand and convince the public of the benefits.
“Lenders are committed to playing their part, and through the government’s Warm Homes Plan, we have the opportunity to really make a difference. Increasing demand for green home improvements will bring significant benefits, stimulate job creation, drive innovation, and reinforce the UK’s energy security in an increasingly volatile global market.”
Further reading on green home finance and improvements
Rachel Doy, senior policy adviser at the Association of Mortgage Intermediaries (AMI), has written on the role of the Adviser Awareness Workstream in green home finance. Her blog covers how the Green Mortgage Advice Initiative is ensuring that mortgage advisers have the knowledge and confidence to engage customers on the topic of green mortgages.
