Why the green agenda will shape the future of housing

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, discusses the current knowledge gap in the sustainable financial products available to homeowners, why there are signs that stakeholders in the housing market may be prompted to do more, and the role that brokers can play in helping the housing market reach net zero.

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Jonathan Stinton | Coventry Building Society
15th March 2024
Jonathan Stinton Coventry new
"If innovators, homebuilders, lenders, and brokers can all pull in the same direction, the challenge to "green up in time” may yet be achievable."

Reaching net zero by 2050 might feel like a tall order for the housing sector, especially as other issues in the “here and now”, such as the cost-of-living crisis, feel more pressing. However, we all know that making this goal a top priority becomes more important with each passing year.

In 2022, over a quarter (26%) of national emissions stemmed from household energy use. If we are to reduce these emissions, it will require action and innovation on behalf of everyone in housing. For brokers, this means staying informed and being ready to guide clients towards greener, more sustainable living options.

Barriers to green adoption

Despite increasingly frequent extreme weather events demonstrating the growing impact of climate change, there has been a lack of cohesive strategy amongst stakeholders to address the problem, with government policies sometimes seeing rollbacks rather than advancements.

The latest research by Coventry for intermediaries has found that very few (7% and 6%) homeowners and landlords know how to accurately gauge the carbon footprint of their properties. Even when green solutions are considered, steep upfront costs and practical complexities have been major deterrents.

A large knowledge gap has also left first-time buyers in the dark about the sustainable financial products available to them. If these are not explained, homeowners might choose to postpone making improvements and miss out on opportunities to make their homes more efficient.

All these factors mean the housing sector’s emissions crisis has somehow escaped action and been left largely unaddressed. However, with recent trends, there are signs that stakeholders in the housing market may be prompted to do more.

Growing demand for sustainability

It’s not just the necessity of reducing carbon emissions that is making ‘going green’ a focus for the housing sector – homeowners are increasingly seeking to live more sustainable lifestyles and are on the lookout for ways to lower their gas and electric bills amid the ongoing energy crisis.

Driven by the urgent need to address the current energy crisis, nine in ten homeowners and landlords are now prioritising their property’s carbon footprint.

This trend is particularly evident amongst the younger generation of homeowners and future first-time buyers. Nearly all homeowners aged 18-24 say they plan to add energy efficiency improvements over the coming year.

The calls for sustainable living are now impossible to ignore. To keep pace and retain clients, the mortgage and housing industry must urgently align itself with the green agenda.

The role of the housing sector on UK emissions

If innovators, homebuilders, lenders, and brokers can all pull in the same direction, the challenge to "green up in time” may yet be achievable.

Building more energy-efficient homes is a critical first step, as 80% of the UK’s estimated housing stock in 2050, the target year for net zero, has already been built today, and much of it is far less well-insulated than anywhere else in Europe. The government has subsequently enshrined several new building regulations as part of the 2025 Future Homes Standard that are intended to force down emissions from new builds by 75-80%. However, a transformation of the housing sector also hinges on the steps homeowners take to retrofit existing properties.

The typical solar panel installation can save over 900kg of CO2 annually, with a carbon payback period of approximately 18 months. This means that all electricity generated by the panel after this time can be considered truly net zero, offsetting any carbon produced from its production. Installing new double glazing also significantly enhances a property's EPC score, and there are further energy savings to be made from recycled water, higher-quality building materials, and efficient lighting. The zero-carbon home has gone from a distant dream to a present-day reality.

Brokers as change agents

So, what steps can those of us in the mortgage market take to create a more sustainable future? Brokers, especially those focused on targeting the valuable first-time buyer market, should look to offer green home improvement advice that appeals to younger generations.

The market for sustainable financial products is expanding all the time as forward-thinking lenders try to get in front of consumer demand. Green mortgages, in particular, which offer incentives to invest in home improvements for energy efficiency, are set to go from being the exception to the norm. An overhaul of the EPC rating system, often accused of being just a desktop exercise, is also likely just a matter of time.

The sector will need to continue to innovate to make green living the standard and reduce carbon emissions from our housing stock, and brokers will need to keep on top of all these developments to ensure their clients can make informed decisions.

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