Research looks to link energy costs and mortgages

The UK Green Building Council (UKGBC) has joined with mortgage lenders, building industry experts and sustainability bodies to a launch research project into building a stronger link between energy costs, affordability and mortgage borrowing.

Marking the start of the UN Conference on Climate Change in Paris (COP 21), the LENDERS project will investigate the increased use of the energy performance certificate (EPC) required on every home for sale.

The research will test the use of EPC data in estimating energy costs on individual homes and look at the potential to incorporate that estimate into the mortgage affordability calculation. It is hoped this may help encourage buyers to choose homes with lower energy bills, and increase their willingness to invest in improving energy efficiency.

Supported and part funded by research agency Innovate UK, the research draws on the expertise of groups including Nationwide Building Society, Principality Building Society, Zero Carbon Hub, Constructing Excellence in Wales, BRE, Energy Saving Trust, Arup and University College London (UCL).

The project derives from two reports into construction, lending and energy efficiency. In August UKGBC published a report in partnership with UCL examining the role of energy bill modelling in mortgage calculations, while in 2014 BRE Wales and the Wales Low/Zero Carbon Hub investigated the link between EPCs and energy bills.

Julie Hirigoyen, chief executive of UKGBC said: “With energy bills representing one of the biggest costs that households face, it seems common sense for lenders to take them into account when assessing mortgage affordability. But despite this helping to reduce lending risks and encourage retrofit, it has so far failed to become mainstream practice with banks and building societies.”

Andrew Baddeley-Chappell, head of mortgage policy at Nationwide and chair of the LENDERS project said: “The research will look at ways of moving away from current estimates of energy costs and towards more detailed affordability calculations based on the individual property.“

Photo: FreeImages.com/Tracey Perry

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