Buyers should be able to borrow more for greener homes says report


A report from the Lenders group has urged lenders to allow for bigger mortgages on more energy-efficient homes.




The government-funded research has found that factoring energy ratings into the lending criteria could allow homebuyers to take out bigger mortgages.

Currently, estate agents are legally required to inform home buyers of their home’s energy performance certificate (EPC) as part of the property listing, however it is not considered in affordability calculations.

However, analysis from the Nationwide Building Society, Arup and building groups suggest that adding EPCs as part of this calculation could allow people to borrow up £11,500 more.

The research suggested that, even if buyers did not want to borrow this extra money, the “perception of value” would draw them in, leading to well-insulated homes selling faster.

Richard Twinn, a policy adviser at the UK Green Building Council, said: “This new research shows that if lenders use information about a property’s energy performance when making lending decisions, this could encourage homebuyers to choose more efficient homes by increasing the size of mortgage available for these properties.”

The report analysed data from around 40,000 properties to see how much of an effect different EPCs have on expenditure. It was discovered that the difference in performance between a home rated A and one rated G would amount to an extra £11,500 of borrowing.

The enactment of this proposal would provide a much-needed lift for the building and insulation industry, with the government’s 2015 decision to cancel the ‘green deal’ having a serious impact on businesses.

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