Lower mortgage rates for energy-efficient homes tested with UK Government support
British homeowners and landlords improving the energy efficiency of their properties are set to benefit from lower mortgage rates under new Government-backed trials.
The Government has today (19 May) confirmed a multi-million-pound funding pot for 26 green finance projects aimed at improving the energy efficiency of buildings.
One of the projects is led by Perenna Bank, which is developing a long-term, fixed-rate mortgage offering that will incentivize homeowners to improve energy efficiency via reduced mortgage rates.
Similarly, Aviva Equity Release UK is being supported to to design a service that allows homeowners to access equity in their property through a specialist lifetime mortgage, freeing up cash to improve the energy efficiency of their homes.
Another project, led by Ashman Bank, is developing a mortgage offer which enables buy-to-let landlords add the cost of energy improvements to their overall package.
The UK’s climate advisors warned last year that Ministers have only designed and implemented ‘credible’ policies to deliver one-third of the emissions reductions that the nation is legally required to deliver by 2050. Improving the energy efficiency of buildings and switching them onto more efficient, low-carbon heat was identified as an area particularly plagued by policy gaps.
This, and the energy price crisis, have led to increased calls for better long-term support for homeowners, landlords and tenants looking to improve building energy efficiency.
Energy Efficiency and Green Finance Minister Lord Callanan said the funding announced today supports long-term commitments on energy efficiency, including an aim for all homes to meet at least Energy Performance Certificate (EPC) level C by 2035.
“We are supporting these organisations to develop fresh and innovative ways of helping more people get better access to energy efficiency measures, such as loft insulation, double glazing and heat pumps,” he said.
All 26 projects awarded funding today will have six months to conduct their research, development and testing. They will then be able to apply for larger Government grants of between £200,000 and £2m each. Funding of £4.1m today is being derived from the £20m Green Home Finance Initiative.
The funding follows on from the allocation of £1.8bn under the Home Upgrade Grant (HUG), which applies to privately owned properties, and the Social Housing Decarbonisation Fund, for homes owned by local authorities and other social housing providers.
Related blog: EY on accelerating the property sector’s net-zero transition
Related interview: Clearbell’s Rob West on delivering Britain’s retrofit revolution
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