Home Property Finance & InvestmentMortgages Green mortgage scheme risks creating a “two-tier property market”

Green mortgage scheme risks creating a “two-tier property market”

by LLP Editor
21st Oct 21 11:47 am

The government is mulling plans to link mortgages to green home improvements by imposing targets for lenders.

The move is designed to help decarbonise the UK’s ageing and leaky housing stock.

The government said it was working with mortgage lenders to support homeowners in improving the energy performance of their properties.

Matthew Fleming-Duffy, founder of the Christchurch-based independent mortgage broker, Cherry Mortgage & Finance: “With an estimated 17 million homes having an Energy Performance Certificate (EPC) rating below B and 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. While 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.”

Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice: “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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