Daily Mail - green mortgages

ended 20. October 2021

A journalist at the Daily Mail is seeking reaction/commentary from mortgage experts about the Government’s green mortgages plan. He's specifically interested in what it will mean for owners of older homes that might not be suitable for energy efficient work. How could it impact the prices of older homes? What would be the wider implications for the market as a whole? Tight deadline so just a few sentences will do!

6 responses from the Newspage community

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"I do not want to see the elderly or those own lower incomes unable to get a mortgage because they cannot afford the cost of improving the energy efficiency of their home."
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"UK homes are one of the major contributors to the country's overall carbon emissions, so it makes perfect sense to tackle that. We have already seen moves to improve the energy efficiency of new build homes and properties being offered to rent. As attention now moves to the older housing stock people own, there are likely to be more issues that arise, especially when we get to property built pre-1900 and especially those that are listed, or are in a conservation area. "Many of these properties would be described by estate agents as "character homes" and so have to be upgraded considerately to maintain that charm. The problem this brings is cost. For example, the cost of off-the-shelf triple glazing for a modern home is going to be a lot less than the bespoke units needed for an 1830's cottage with its non-standard size windows. "I guess the question is: how green does the Government want houses to get and how much are they prepared to help homeowners acheive that goal?"
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"With an estimated 17 million homes having an Energy Performance Certificate (EPC) rating below Band C, the UK has a lot of work to do in retrofitting these properties with energy-efficient improvements to meet its ambitious net zero targets by 2050. The enormity of this task cannot be understated. England has some of the oldest housing stock in the world, with 21% of dwellings built before 1919 and 16% built between 1919 and 1945, and older properties tend to be colder and often more challenging (and expensive) to improve. "However, if Green Mortgages – where the cost of the borrowing is linked to the energy performance of the property – become more widely available, huge numbers of homeowners would be encouraged to take positive action in making their homes more energy efficient. "Whilst every step the Government takes in this direction should be applauded, mortgage providers can't just be expected to just cut their margins, as this is an unsustainable practice. Green mortgages are generally heralded as lower risk loans so the PRA could reduce the lender’s capital requirements for this type of product. This in turn would reduce the costs associated with providing a green mortgage and could be passed on to the consumer in the form of discounts and incentives."
"Like most of Boris' ideas, it's another political meringue, sweet but lightweight and with very little substance. If politicians want to make homes more energy-efficient, maybe start with ensuring new builds are correctly constructed before penalising people with higher interest rates. Green mortgages are one part of the fix, however the bigger part is surely to help people that need to insulate their homes do so with a green grants scheme. "Regarding older properties, it could easily risk a two-tier property market. That said, there would need to be some allowance for listed buildings and the like. The most significant impact would almost certainly affect first-time buyers and younger people disproportionately, as the homes they buy tend to be smaller and older. "However, lets put this in context; yes, we have to move to a greener future, but the UK contributes in total 1.1% of global emissions and approximately 40% of these come from households, meaning 0.44% of total global emissions come from the UK households and this measure includes heating, electricity, transport, waste and aviation. So I'd say there's bigger fish to fry."
"It's a crazy idea. The focus should be on building more affordable homes as this will simply hurt those with the least amount of money trying to get onto the property ladder or those in older properties unless massive grants are issued to help those improve those properties, and if they can't be improved, it will only add to the housing supply problem by creating mortgage prisoners overnight."
If you have an old house that is not energy efficient it may well be harder to sell in the future, especially if buyers are not prepared to spend the money to bring it up to date. Lenders are already under pressure to provide more Green mortgage products and they are telling us this market will be huge. Banks and building societies need to act because the government is applying pressure and pushing them to help combat climate change.