"The appeal of the green mortgage market continues to grow as a greater number of options are emerging across the residential and buy-to-let sectors"
Businesses will also get support, with bills capped for six months, and this help will be available in England, Scotland and Wales with equivalent assistance for Northern Ireland. This was a welcomed move, but with bills still set to increase on 1 October, the attention on how and where to be more energy efficient is unlikely to wane anytime soon.
We know that the UK has an ageing housing stock and the age of a property is the most significant factor associated with energy efficiency, ahead of fuel type and property type. So it comes with no great surprise that homes built in 2012 or later are much more likely to have one of the top three energy efficiency ratings than older homes.
According to analysis from the Office for National Statistics (ONS) earlier in the year, almost all homes built in England and Wales since 2012 have a high energy efficiency rating, compared with just 12% of assessed homes built before 1900 in England, and 8% of homes built before 1900 in Wales. One in six homes in England (15%) and a fifth of homes in Wales (23%) were built before 1900. Homes in England and Wales were most commonly built between 1930 and 1982 (46% in England and 39% in Wales). In England, 7% were built in 2012 or later, and in Wales, 5%. Overall, fewer than half of assessed homes in both England (42%) and Wales (37%) have an EPC rating of C or higher.
This data outlines the sheer volume of homeowners and landlords with older property stock. For those who may have taken steps to upgrade these in recent times, and for potential buyers looking to buy newer properties, the appeal of the green mortgage market continues to grow as a greater number of options are emerging across the residential and buy-to-let sectors, even in the more specialist markets.
It’s a real positive to see a range of lenders supporting the green agenda and awareness growing from borrowers and intermediaries. With that in mind, it was interesting to see that searches for green mortgages grew by over a third (34%) in July on Legal & General’s SmartrCriteria system.
In addition, a survey by Kingfisher – the owner of B&Q and Screwfix – of 2,000 UK adults who own or rent property found that 60% are more interested in energy efficiency than they had previously been due to recent rising bills. However, just 40% know their home’s EPC rating. 34% were said to be planning energy efficiency improvements in the coming year, with the most popular measures being double or triple glazing and wall insulation.
The survey also found that rented properties are, on average, more energy efficient than owner-occupied homes. However, 72% of renters want their landlords to do more to improve the energy efficiency of their properties, while only one in five (20%) said their landlords had made improvements in the past year.
Education remains the key to advancing the green mortgage market and in making homes more energy efficient in a cost-effective manner. Although this is easier said than done, especially for landlords. Many grey areas remain when it comes to if, when and how they need to upgrade EPC ratings in order to be able to let out their properties and how much these improvements may actually cost and if any subsidies are included.
It’s easy to say that the mortgage market is still in the early stages of the green revolution but there is also an argument that we, as an industry, should be further down the line. And lingering uncertainly around potential EPC legislation for landlords is certainly not helping to simplify or expedite this journey.
