For better or worse, in recent months activists across the UK have put their bodies on the line to raise awareness of the impact of housing emissions.
Their message is clear: if we really want to tackle climate change, we need to start upgrading our homes.
But what about the mortgage market that funds the purchase of many of those homes? Mortgages have, so far, been the forgotten part of the green revolution that has overtaken much of the financial services market. But the growing interest in green finance, and the public concerns that recent protests reflect, suggest this cannot be the case for long.
The mortgage market needs to start thinking about its contribution to a more sustainable Britain. It is vital that mortgage professionals keep green mortgages and EPC ratings front of mind, but also understand what role these might play in the UK’s green agenda. It is also important to consider how this market will evolve over time.
We are very much at the start of a long-term journey, so now is the perfect time to consider the role that individuals and businesses can play in supporting these developments and ultimately creating a better future for all. Apart from anything else, borrowers will increasingly want and need to see progress in this area, making it imperative that advisers respond to these demands today.
The currently limited market for green mortgages should probably be something of a surprise, given government and public support for cutting carbon. Despite protesters’ complaints, the government already has an ambitious target to achieve net-zero carbon emissions by 2050. It is not soon enough, protestors and others may say, but even this requires a significant and fairly rapid improvement to the energy efficiency of the nation’s housing stock.
In August, the government announced £160m of funding to support improvements to 38,000 of the UK’s worst energy-performing social housing properties – those with energy performance certificate ratings of D or below. Over the next 10 years, it is committed to £3.8bn of funding to enhance homes across the country. It aims to ensure that as many homes as possible reach EPC band C or above by 2035.
Before that, the Future Homes Standard to be introduced by 2025 will require new-build homes to be future-proofed with low-carbon heating and leading levels of energy efficiency.
Modern construction methods are making this more achievable than ever. Modular construction, for instance, enables us to build homes with fewer materials overall but also with less waste, ensuring that we have sufficient resources to keep up with growing demand.
Modular housing businesses can produce precision-engineered homes that achieve an EPC A rating – equivalent to the top 1-2 per cent of the most energy-efficient homes in the UK. Using technology proven across Europe, this method of building can quickly provide cost-effective, energy-efficient buildings, from apartment blocks and terraces to semi-detached and detached houses.