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Mortgages Related to “Green” Mortgages Considered by the UK | Energy Efficiency

The government is looking for plans to link mortgages to improving green homes by imposing goals on lenders to help decarbonize the UK’s aging and leaky housing stock.

Emphasizing the Net Zero strategy move announced Tuesday, the government said it is working with mortgage lenders to help homeowners improve the energy performance of their assets.

Measures under consideration include voluntary goals for banks to improve averages Energy performance certificate At least a housing rating in the loan portfolio to Band C by 2030.

According to the document, these goals may be mandated “in case of inadequate progress”.

After discussions on this year’s issues are over, the minister will consider options.

Details of the Green Mortgage Scheme, one of the most radical changes in the lending market since the 2008 financial crisis, were announced when the UK Government announced the flow of its Net Zero policy. Cop26 Climate Summit in Glasgow this month.

Some lenders, such as NatWest, have already implemented green mortgage products and are offering discounted interest rates on homes with an energy efficiency rating of A or B. Halifax also offers a £ 250 cashback incentive for customers buying the most energy efficient homes.

However, there are concerns that preventing banks from having energy-inefficient homes on their mortgage books risks penalizing poor customers who may struggle to improve their real estate ratings. ..

The risk of not meeting mortgage requirements or being denied a mortgage can force homebuyers to spend thousands of pounds on improving energy efficiency. It can also cause a significant increase in “mortgage prisoners” – money-saving transactions from new lenders who are trapped in contracts and refuse to take on homes that cause higher carbon emissions. It cannot be secured.

Sara Coles, a personal financial analyst at Hargreaves Slan’s Down, said: They may never be able to recoup the cost of improvement through the sale, as they may not be able to rent any more and the cost of converting to an older property may be disproportionately high. “

Listed property owners may face additional financial burdens as it is difficult to make significant changes to historically protected buildings.

average Cost of improving energy efficiency According to a Nationwide Building Society survey, one home costs about £ 8,100. However, that number rises to £ 25,800 for homes with F or G energy efficiency ratings. The average annual savings from “greening” a home is estimated to be around £ 1,780 per year. This means that old property owners will only begin to enjoy financial benefits after 14 years.

Bank Lobby Group UK Finance spokesman said, “Greening housing stock is essential to meet climate change obligations, and banks and financial providers can help achieve this goal, leaving consumers behind. We are working hard to prevent it. “

Details of the plan were released after the government investigated the financial industry for potential changes this year. This move will be part of the impetus for upgrading as many homes as possible to a Band C rating by 2035.

In a Net Zero strategy announced Tuesday afternoon, the government said, “We are working with mortgage lenders to help homeowners improve the energy performance of real estate and respond to talks with lenders. Will be announced soon. “

We asked the finance and business units for comment.

Mortgages Related to “Green” Mortgages Considered by the UK | Energy Efficiency

Source link Mortgages Related to “Green” Mortgages Considered by the UK | Energy Efficiency

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