Energy efficiency requirements may slow housing market
The housing market may be stalled by government plans to require buyers to improve their new homes’ emergency efficiency under their mortgage terms.
Property Mark, the trade body that represents letting agents, said the requirements – which have yet to be set out in detail – could initially deter people from moving homes.
Mortgage lenders will need to disclose the energy efficiency of homes they lend money for, plans published on Tuesday outlined.
Lenders will also have to set themselves goals to improve the insulation of homes on their books.
Plans were included in the government’s roadmap to slash CO2 emissions by up to 70 per cent by 2030.
The plans could initially make older properties harder to sell, Property Mark’s policy and campaigns manager, Timothy Douglas, told CityA.M.
Home buyers may have to invest thousands of pounds in making improvements to their homes, something that could create “significant barriers,” Douglas said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said there was “increasing impetus” behind the green revolution.
Landlords will also be required to ensure properties for new tenancies must have an EPC rating A-C.
“Without the correct incentives, these costs are likely to be passed on in the form of higher rents. Lenders such as Leeds and Landbay already offer green buy-to-let mortgages, with others expected to follow suit,” Harris added.
“Without changes or improvements, lenders may restrict lending to lower loan-to-values, higher pricing, or not lend at all. This could penalise those who are unable to adapt to or adopt new efficient technologies economically and potentially create the next round of mortgage prisoners.”
Simon Gammon, Knight Frank Finance’s managing partner, said the current discounts in green mortgage products at the moment were “quite tiny,” with savings of hundreds not thousands to be made.
“Increasingly, what we are going to see is a differential in price between an efficient home and a non efficient home being remortgaged.”
It will be an incentive for home owners to improve their properties every time they remortgage, Gammon added.
Homeowners will also be able to apply for a £5,000 grant to install a heat pump from next year, in a ‘boiler upgrade scheme’, to slash emissions.
The National Residential Landlords Association (NRLA) has called on the government to confirm whether landlords will be able to apply for these grants from next year too.
“Eighty per cent of private rented households have gas central heating and replacing such systems will be both costly and vital to achieving net zero,” NRLA boss Ben Beadle said.
“Once again private landlords have been left waiting for the Government to publish details of the standards they will be required to comply with, the deadlines they must meet, and how such work should be funded.”