On 18 November, the Government’s consultation on ‘Improving home energy performance through lenders’ opened, closing on 12 February 2021.
You can read the full consultation here.
The Government state: Crucially, lenders interact with homeowners at key points, including when they buy, remortgage or improve their properties. In stimulating a market for green finance and capitalising Improving Home Energy Performance through Lenders on the existing interactions lenders have with mortgagors, we can ensure access to attractive finance options for homeowners.
Whilst at a first glance this may seem a fact finder, it is arguable a sign post to another level of qualification for borrowers in order to achieve competitive pricing in the future and therefore release value of property assets. We would recommend a read for those involved in the development and management of residential property.
It is clear from the impact assessment that the government is looking for ways to stimulate property owners (particularly the private sector) to undertake cost-effective improvements to existing property stock.
The ‘target’ in this instance are properties that are mortgaged where cost effective energy performance improvements would not have occurred otherwise. Wider perceived advantages include lower carbon emissions, improved air quality and energy bill savings for their occupants meaning that potentially there would be greater discretionary spending in the wider economy. Currently, it is at the consultation stage but clearly, the government is looking at different levers to instigate owners to undertake change to existing property stock.
Whether this is linked into MEES (minimum energy efficiency standards), the use of retentions by lenders from advances pending specific works, a ‘tax’ based on a small additional margin from the borrowers’ monthly mortgage payments (pending completion of works to hit an agreed energy efficiency standard) that get paid to undertake wider energy efficiency works or a myriad of other options with this blank canvas will depend on the engagement of parties. It may lead to a growth in the green energy lending products in the market.
The key will be balancing the benefits of improved stock against any additional bureaucratic costs, as these are likely to be met by the homeowner.
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