Some homeowners with larger period properties could struggle to find a cheap mortgage and see the value of their house cut amid the drive to make the housing stock greener, it has been suggested.
The UK Government’s Heat and Buildings Strategy said a consultation on improving home energy performance through lenders closed earlier this year.
The proposals would require mortgage lenders to disclose energy performance across their property portfolio, with voluntary targets to improve the energy performance of their portfolios to an average of EPC band C by 2030.
The consultation proposes making targets mandatory if insufficient progress is being made.
This would help drive the development of a green home finance market to support homeowners to make energy efficiency improvements, the Government said.
The Prime Minister’s official spokesman added that the Government is considering responses to its consultation and it would only introduce a policy which was guided by fairness for the public.
The UK currently has 40% of homes receiving a band C energy rating – up from just 9% in 2008, the Government said.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, suggested that those planning to downsize as a way of raising an income for retirement could be among those affected.
She said: “The Government’s plans for green mortgages could cut the value of older, family homes.
“The plan is to improve the energy efficiency of homes to a rating of C – only 40% of them meet this standard today.”
She said that while lower energy bills may offset some people’s costs, “the problem is that while some properties can be improved at relatively little cost, other homeowners will find it prohibitively expensive”.
She added: “They may not be able to afford to borrow more, or the cost of changes to older properties may be disproportionately high, so they’d never recoup the cost of the improvements through a sale.”
She suggested that while there may be some exceptions, “it’s likely to get much harder to track down a cheap mortgage for an inefficient property, which will make them more difficult to sell, which in turn is likely to bring down their value”.
“Owners may also struggle to re-mortgage, so could end up paying over the odds each month,” she said.
Ms Coles added: “If you’re living in an old family home, and you need to trade down to boost your income in retirement, it could have far-reaching consequences for the rest of your life.”
The Prime Minister’s official spokesman said: “We have consulted on setting requirements for mortgage lenders to support homeowners to improve the energy performance of their homes. The aim of that is to catalyse the development of a green finance market and make available affordable finance.
“We are considering the responses we have received, we have made no decisions on that front and we would only introduce a policy which was guided by fairness for the public.”
Trade association UK Finance said banks and other lenders are committed to making sure customers are not left behind.
A spokesman for UK Finance, which represents banks and other lenders, said: “Greening our housing stock is vital if we are to meet our climate change obligations and banks and finance providers are committed to helping achieve this goal and making sure consumers are not left behind.”
Timothy Douglas, policy and campaigns manager at estate and letting agents’ body Propertymark, said: “Incentivising green improvements to properties via lending creates risks of trapping homeowners with older properties, those who live in rural areas, listed buildings or conservation areas, making their homes difficult to sell and therefore reducing the value.
“Stopping a large portion of housing stock from being able to enter the market could cause havoc for homebuying and selling as well as the wider economy.”
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