The government has awarded £4.1m of funding for lenders to help borrowers make their homes more energy efficient, and landlords will also get a share.
Energy efficiency in our homes has become a priority for millions of people, from homeowners to tenants and therefore buy-to-let landlords. People are seeking ways to reduce their energy bills and cut costs, and living in a more energy efficient property is a key way to achieve this.
As part of the government’s £20m Green Home Finance Accelerator, funded through the £1bn Net Zero Innovation Portfolio, the funding is being split between a range of banks and lenders, who will all design and run trial products for borrowers to make the most of.
In the private rented sector, landlords are still in the dark about when new minimum energy efficiency standards (MEES) will come into effect, which will mean that properties graded either D or E or below will no longer be able to legally be rented, without an official exemption.
Therefore, many in the sector are already assessing their priorities when it comes to new investments, as well as making attempts to retrofit and improve their rental properties ahead of time to make sure they comply.
New offering for landlords
The government has awarded Ashman Bank £200,000 to go directly towards helping landlords to decarbonise and improve their rental properties, to improve the energy efficiency of the sector. It would enable landlords to add the costs of certain upgrades onto their mortgage borrowing to make it more cost-effective.
Ashman Bank will now design and run this trial to create a product called Impact Buy-to-Let (IBTL). It is expected to be the first product of its kind to “go beyond EPC ratings”, and will be piloted in the second half of the year.
The retrofitting works needed to improve the property both now and in the future will be assessed, and landlords will be given the knowledge and data on the work required.
Caroline Luxmore, chief commercial officer at Ashman Bank, said: “Convincing landlords to invest in energy efficiency has been notoriously hard as it is often seen as a huge expense with little knowledge of the impact they could have or where to start.
“This grant will allow us to develop a digital product that will lead to property owners having the data and insight they need to manage retrofitting works and understand the impact on energy they will have.”
Other funding distributed to lenders
The Green Home Finance Accelerator is targeting regular homeowners as well as landlords. Aviva Equity Release UK has been granted £87,612 to create a way for homeowners to access equity in their property via a specialist lifetime mortgage, which they can put towards improving their property’s energy efficiency.
Perenna Bank has also been granted more than £193,000 to help it create a long-term, fixed-rate home loan option that will give customers an incentive to make their homes more energy efficient by offering a reduced mortgage rate.
In total, the government is handing out funding to 26 different home energy pilot projects, which will run through lenders offering green products to their customers.
Lord Callanan, Minister for Energy Efficiency and Green Finance, said: “The government has put in place long-term commitments to ensure homes across the country have greater energy efficiency to reduce bills, drive down energy use and lower emissions.
“We are supporting these organisations to develop fresh and innovative ways of helping more people get better access to energy efficiency measures, such as loft insulation, double glazing and heat pumps.”