Increased Borrowing Capacity for Mortgages for Greener Homes


Yet another experiment showing the UK means business when it comes to sustainability has been implemented, allowing borrowers to apply for bigger mortgages when purchasing green properties. This brand new scheme is designed to encourage energy efficiency.
The scheme will take into account energy efficiency when making affordability calculations. Factoring in lowers gas and electricity bills could mean borrowers can increase the size of their mortgage by £11,500.
This energy efficiency scheme is due to be launched in June, at which time Welsh help-to-buy loans will begin taking into account the energy rating of new homes. This applies to all new-build homes of a value of up to £300,000.
The aim behind the scheme is to encourage householders to take steps to ensure their house is energy efficient. The current inertia we are seeing does not bode well for a nation hoping to be 100% green in the foreseeable future. What’s more, the Welsh government, the brain behind the scheme, believes that this move could assist more people to get on the housing ladder. It will also, eventually, mean that energy efficiency becomes something people automatically factor in when purchasing property.
It is hoped that traditional lenders will follow suit and make the same changes to their lending policies. The Building Research Establishment, a body that has undertaken substantial research into green mortgages hopes that banks and building societies will see the benefit of offering bigger mortgages. It believes that energy efficiency is an important factor to consider when making lending decisions. If the mortgage industry reacts as hoped, this could signal better sustainability in times to come.
Naturally, lenders are nervous about making this changes to their lending policies. Few banks want to be pioneering and make the first move – particularly when the financial stakes are high. However, Barclays seems to be spear-heading the way forward already by offering a green mortgage product that will give borrowers a discount on interest rates if their new build is within the top two energy bands.
New builds will not be the only properties that can benefit from new green lending. This new approach has great potential for existing homes. For example, someone wishing to borrow more on top of their mortgage for home renovations may be able to increase the amount available to borrow if their renovation will make their home more energy efficient. Such renovations could move homes between energy bands. An incentive like this could wake people up to the reality of the importance of energy efficiency in their home.
This is not the first time a carrot has been dangled before the eyes of householders in a bid to encourage the installation on insulation. Lower stamp duty and council tax discounts have also been put forward. Green mortgages have been praised as symbolically important but eyes seem to be more focused on stamp duty. Stamp duty, it is said, is the most effective mechanism that government has to use as an incentive.

If the stamp duty plan goes ahead, it would be revenue neutral for the Treasury. Although buyers will be given discounts on efficient properties, this will be offset by an increase in stamp duty for inefficient properties. More is expected to be heard on this matter later on in the year. The autumn budget looks set to be when announcements are made, encouraging people to take action to make their homes more energy efficient. 

Comments

Post a Comment

Popular posts from this blog

The largest solar farms in the world

Image
Solar energy is gaining in popularity. Most people know solar power as the rooftop panels that are being installed on more and more houses; or projects like Elon Musk’s Solar Roof. However, there are many different applications for solar and many ways energy can be generated using the power of the sun. Electricity is the most common use, but solar energy can also be used to heat water for use in the home, or a swimming pool, etc. Solar arrays can also be used to redirect the beams of the sun to a central point which is then converted to heat energy to drive turbines, much like a coal plant would use a burner – only this time there are no emissions, and just clean energy. A large array of solar panels, be it photovoltaic or thermal, is called a solar farm. Here we take a look at a few of the biggest in the world. Tengger Desert Solar Park Located in China, the world’s largest solar farm uses solar PV panels to generate 1,500MW of electricity. This plant covers 43 square kil...
Read more

Water Markets, Privatization and Deregulation

Image
Energy Expert  To bring demand and supply into balance, water markets are necessary. Under a market system, prices are not regulated, but are determined by the free exchange of water rights. In most countries where water is scarce or costly to access, systems of rights for water have emerged either through custom or through laws and regulations. The rights define the amount of water to which the owner is entitled. With rights well defined, water markets allow owners to make better decisions about the water they use. They can decide for themselves whether to use the water or trade the right. The owner of the right may choose to use the water himself when the market price is low. In fact, if the price is low enough the owner may even decide to enter the market and purchase additional water. When prices are high, however, the owner may find it cost effective to conserve water and sell it. While water right markets are emerging all over the world, they are still in their infa...
Read more

The Global Nuclear Report

Image
Nuclear power has been a source of much contention for some time now and the argument of whether it should be harnessed to its fullest potential has been hotly debated. Whichever side you stand on, there is no denying that having a solid understanding of the ins and outs of nuclear power is essential for getting to grips with the global energy industry. Especially now that it looks like nuclear power seems to be creeping back on to the world’s stage in various different forms. While the West appears to be focusing its attention on revamping existing nuclear facilities, the big Asian powers are in the process of building new ones. Japan and South Korea, in particular, are quickly climbing the nuclear energy ladder by producing new reactors and developing an unrivalled expertise in the area. Elsewhere in the world, Russia is currently exploring the possibilities of long-term uranium supply contracts – especially with Kazakhstan who is currently the world’s number one producer ...
Read more