BRE and a partnership of mortgage lenders, building industry experts, green energy groups and sustainability bodies have joined forces to research building a stronger link between energy costs, affordability and mortgage borrowing.
Chaired by Nationwide Building Society, and coinciding with the start of the UN Conference on Climate Change in Paris (COP 21), the Lenders project will investigate how energy performance certificates (EPCs), required on every home for sale, can be linked to mortgage offers.
The research will test the use of EPC data in estimating energy costs on individual homes and look at the potential to incorporate that estimate into the mortgage affordability calculation.
In turn, this may help encourage buyers towards homes with lower energy bills, and increase their willingness to invest in improving energy efficiency.
Andrew Sutton, associate director BRE Wales, who is conducting the research, said: “This project is about using normal market forces to introduce energy efficiency into residential values through enabling those looking to buy an energy efficient home to have more in their pocket. This could affect the hard-to-reach privately owned homes to refurbishment as well as support the chancellor’s funding for 400,000 starter homes.”
Andrew Sutton: “market forces”
Supported and part funded by Innovate UK, the research is supported by the Principality Building Society, UK Green Building Council, Zero Carbon Hub, Constructing Excellence in Wales, Energy Saving Trust, Arup and University College London (UCL).
Andrew Baddeley-Chappell, head of mortgage policy at Nationwide, which has championed “green” lending policies, said: “The research will look at ways of moving away from current estimates of energy costs and towards more detailed affordability calculations based on the individual property. Fuel charges are the largest unavoidable household costs and may vary by a large degree.
“Such detailed data could allow lenders to acknowledge that smaller fuel costs could allow more to be borrowed on the mortgage, nudge buyers towards more efficient buildings and potentially reflect the added value of such properties.”
The Lenders project follows on from two previous reports into construction, lending and energy efficiency. One was produced by BRE Wales and funded by The Wales Low/Zero Carbon Hub, while another piece of work was produced by UK GBC in partnership with UCL.
Now the wider group is expanding on the earlier research to create a larger study into the feasibility of influencing property choices and lending practices through energy efficiency.
