Government exploring how to improve energy performance through lenders

The government is seeking views on how mortgage lenders can help householders to improve the energy performance of their homes.

On 18 November, it published an open consultation, setting out proposals that could improve the energy performance of mortgaged properties and deliver substantial emissions reductions, helping to meet the fourth and fifth carbon budgets, while supporting a decarbonisation pathway consistent with the 2050 net zero goal. Other benefits include increasing the quality, value and desirability of homeowners’ assets, lower energy bills, warmer homes and paving the way for the UK’s transition to low carbon heating.

It explained that lenders have a role to play in building the market for energy performance improvements and set out ways to improve the awareness of the energy performance of their portfolios. Annual disclosure of portfolio-wide Energy Performance Certificate (EPC) data and the gross value of lending for energy performance improvement works would allow for comparisons to be made between lenders. It would also allow interested parties to determine how the energy performance of homes is influencing lending decisions.

The government is seeking views on whether the option to provide additional commentary alongside EPC data would help lenders with older portfolios, while also proposing a shift from voluntary to mandatory disclosure. It wants to know what level of uptake could be expected from a voluntary policy. It is also proposing that disclosure is accompanied by the setting of improvement targets, with the government’s preferred option a voluntary target – like a portfolio average of EPC Band C by 2030 – with the option for a mandatory backstop. This would allow lenders to test and market green finance products, allowing take up from early adopters and driving emissions savings from the outset.

The consultation will close at 11:45PM on 12 February 2021.