Green investment needed to hit 2050 goals
The Green Finance Institute recently reported that the UK’s housing stock is one of the oldest in Europe with approximately 20% of our homes built pre-1919, 85% using a gas boiler for heating. Approximately 50% have uninsulated walls, according to the UKGBC’s Whole-Life Carbon Roadmap. The UK Climate Change Committee has estimated that £250 billion needs to be invested in UK home upgrades to achieve the Government’s net zero target by 2050. This means that private finance sectors, such as banks, building societies and institutional investors play a significant role now and over the coming years.
How is the industry going green?
The need to unlock finance to retrofit homes in the owner-occupier sector is now clearly recognised, and the range of products available is beginning to grow. Pioneering financial institutions are launching and continually developing new ways of lending for energy efficiency upgrades. Many mortgage lenders have launched green mortgage products, although at this stage the products are fairly simplistic. They tend to either offer a discount or cashback. However, it is anticipated that we will begin to see product innovation from the mortgage lenders over the coming months. Product innovation is something Mortgage Intelligence are actively working on with our lending partners.
Firms and advisers that place Buy to Let business and have landlord clients will know that the current draft of the Minimum Energy Performance of Buildings Government bill states that new tenancies must be EPC rated C or higher by 2025 and for existing tenancies by 2028. Whilst this may be a challenge, it also presents an excellent opportunity for advisers to re-visit their back book. This offers an opportunity to sit down with their landlord clients and evaluate their whole portfolio to see which properties could be improved. With the Base Rate predicted to rise further landlords could be more open to the idea of remortgaging to free up funds and lock in their mortgage rates.
Almost certainly, there will be opportunities for landlords to release equity through remortgage. Using a second charge mortgage or bridging could be methods to help landlords improve their properties. Helping clients through the complex green landscape provides advisers the opportunity to become a business partner as opposed to just a mortgage adviser and of course by engaging with the client also provides the opportunity to open the protection conversation.
The management team at Mortgage Intelligence recognise the complexity and fast pace of change within the green agenda. We are committed to working with our lending and insurance partners to ensure our Network and Club firms and their advisers are continually updated with information and tools to support both them and their clients. Please keep a close eye on our website for regular updates.