Why the green agenda will shape the future of housing: Part two
April 2024
In our last blog we made it clear why the green agenda will be a focus for the housing and mortgage markets in the years ahead.
Britain has some of the leakiest housing stock in Europe, with over a quarter (26%) of carbon emissions coming from our homes1. There is plenty of work to do to cut these carbon emissions – government, lenders, brokers and property owners will all have a role to play in achieving net zero. But action to tackle climate change has been held up by a number of barriers. So, what is causing this hold-up and what could enable brokers to promote more eco-friendly options to aspiring homeowners?
Barriers to green adoption
Despite increasingly frequent extreme weather events demonstrating the growing impact of climate change, there has been a lack of cohesive strategy among stakeholders. Government policies have sometimes seen rollbacks rather than advancements.
Our latest research has also found that the vast majority (93% and 94%) of homeowners and landlords don’t know how to accurately gauge the carbon footprint of their properties2. Even when green solutions are considered, the steep upfront costs and practical complexities have been major deterrents.
A substantial knowledge gap has also left first time buyers in the dark about sustainable financial products available to them. If these are not explained well, homeowners might choose to postpone making improvements and miss out on opportunities to make their homes more efficient.
All these factors mean the housing sector’s emissions crisis has somehow escaped action and been left largely unaddressed. Yet, with recent trends, there are signs that stakeholders in the housing market may be prompted to take action.
The direction of travel
Homeowners are increasingly seeking to live more ethically conscious lifestyles, and they’re on the lookout for ways to lower their gas and electric bills amid the energy crisis.
So, what steps can those of us in the mortgage market take to create a more sustainable future? Brokers, especially those focused on targeting the valuable first time buyer market, should look to position themselves ahead of this trend to appeal to younger generations and build new relationships with clients that could last a lifetime.
The general market for sustainable financial products is expanding all the time as forward-thinking lenders try to get in front of consumer demand, and we’re seeing more grants and subsidies, such as the Home Upgrade Grant, created to ensure net-zero living is affordable for everyone. Green mortgages, in particular, which offer incentives to invest in home improvements for energy efficiency, are set to go from being the exception to the norm. Our Green Further Advance, for example, will offer clients lower interest rates if they use at least 50% of their borrowing on improvements designed to make their property more energy efficient. Brokers will need to keep on top of all these options to ensure their clients are able to make informed decisions.
Finally, the 2025 Future Homes Standard will obligate homebuilders to use higher quality materials, forcing down emissions from new builds. An overhaul of the EPC rating system, often accused of being just a desktop exercise, is also simply a matter of time.
The sector will need to continue to innovate to make green living the standard and reduce carbon emissions from our housing stock. Coventry for Intermediaries will continue to follow the green agenda throughout the year ahead.
References
