While other ways of getting us to net zero are complex and not yet worked through – nuclear power and increased use of hydrogen in our homes are two good examples – measures to make our homes more energy efficient are already with us.
They are not rocket science; they are understood and eminently doable now.
Analysis of data from the English Housing Survey indicates:
- 36 per cent of households rent their home.
- 34 per cent own their home outright.
- 29 per cent own their home with a mortgage.
As an aside, perhaps the buy-to-let market needs to get up to speed or throw in the towel altogether.
The government plans to extend the minimum energy efficiency standards to a C for new tenancies in 2025 and existing tenancies in 2028.
According to a survey of 800 landlords by buy-to-let lender Paragon, almost half of respondents (42 per cent) have no awareness of the proposed changes, while 28 per cent are aware but have a poor understanding of the details.
It is not as if people do not borrow to improve already. Information published by the Financial Conduct Authority and Bank of England provides a breakdown of the purpose of a mortgage being taken out.
It can be interpreted that already around 5 per cent of mortgages were taken out for improvements, which might include energy efficiency upgrades.
Making the mortgage green
So how can mortgages be structured to promote greener living environments?
Dashly believes the industry should develop a decarbonisation mortgage product, supported by funds from central government, to be made available through the current network of mortgage brokers.
Example:
A home owner has a £180,000 mortgage on a £260,000 E or D-rated property. This is coming to the end of a fixed rate.
Instead of just refinancing the £180,000, the new loan has a further green tranche, say £15,000 at a discounted rate. This can only be used to perform the energy efficiency works.
We know £15,000 will do this because its documented in the EPC. This will remove vague 'green' claims and actually get something done.
In addition, the decarbonisation mortgage product would be a subordinated low or no interest loan, secured against the property and underwritten by the UK government.
Mortgage brokers would be interested in this, and platforms and tech developers in this space could leverage their network of brokers to encourage potential borrowers to consider this product.
Using big data, platforms such as Dashly can precisely identify property owners, and execute the analysis of any decarbonisation mortgage loan required to undertake work.
For example, through the use of such data, platforms would already know exactly which works can be undertaken on which property.
This could be overlaid with the mortgage data that tells platforms such as ours which borrowers have enough equity and where the borrowers have the equity to do it.
