- New Fund to Boost Homeowners’ Choice of Affordable Green Financial Products to Help Reduce Their Energy Use
- the government encourages lenders to innovate in the green finance market so that families can reduce their energy bills and reduce their carbon emissions
- research shows that homes with a C-rated energy performance certificate (EPC) sell for 5% more than less energy-efficient homes
The new support launched by the government today will help banks, building societies and the wider financial sector create more green financial products for homeowners.
The new products will be designed specifically for those looking to improve the energy efficiency of their properties.
Ministers want to develop the green finance market and provide households with more choice of affordable financing options to renovate their homes, helping them to spend less on energy. This is part of wider efforts to ensure that as many homes as possible EPC band C by 2035 as possible.
Up to £20m is being made available to lenders and other organisations, through the Green Home Finance Accelerator, to develop new loan products that provide affordable seed capital to those who can afford it. afford, to help make their homes more comfortable, cheaper to run and with a lower carbon footprint.
The funding will be used to help lenders and other providers develop, test and pilot innovative new green finance products that can help a wide range of homeowners overcome the upfront costs of a larger renovation. It also aims to build knowledge and understanding of green finance and how energy efficiency can make homes cheaper to operate.
This follows the launch of the new Energy Price Guarantee, which capped the bill for a typical UK household at an average of around £2,500 a year until April next year. It is also on top of the £400 cut on energy bills for all UK households.
20% of emissions come from buildings and nearly 2 thirds of residential properties are below CPE C, meaning their energy bills could be hundreds of pounds more than homes with a higher CPE Evaluation.
The average CPE the rating of owner-occupied homes is D. Owners of these properties can help push their homes to CPE C by various measures, depending on the property. This can often be by adjusting small things like LEDs light bulbs or heating controls. On other properties this could mean fitting cavity wall and attic insulation and possibly drafty floor insulation, which together would cost an average of £6,500. But these could save households over £300 a year on their energy bills. The financial products that today’s financing will help create will ensure that households have access to the money they need to make this type of investment in their home.
Minister for Business, Energy and Corporate Responsibility, Lord Callanan said:
Increasing the energy efficiency of homes will not only reduce our impact on the climate, but will also help homes stay warmer for longer.
Green finance products will allow households with more means to spread the costs over time, empowering them to invest in their properties, improve their energy efficiency and resale value.
Today’s funding will give more companies in the financial sector the opportunity to create and offer these products and, in doing so, help households reap the benefits both in investing in their properties and in the savings they can make on their energy bills.
Today’s announcement is the latest in a series of measures to improve the energy efficiency of the country’s building stock.
The government’s £12bn heating aid schemes include the £450m Boiler Upgrade Scheme, which opened to voucher applications in May 2022. This is already prompting people to switch to low-carbon heating, offering grants of £5,000 for the initial cost of installing an air source heat pump and £6,000 for a ground source heat pump.
The government is providing £4billion between 2022 and 2026 to improve the energy efficiency of buildings, with 450,000 low-income households whose homes have been upgraded with things like wall and attic insulation, paneling solar panels and modern heating controls.
Homes director for Lloyds Banking Group, Andrew Asaam, said:
About 2 thirds of households do not currently reach a CPE Class C, meaning millions of people live in homes that are cooler, airier and more expensive to heat than they need.
We are committed to helping people improve their properties, reduce their carbon emissions, lower their fuel bills and live more comfortably in their homes. We will continue to develop, test and launch products that incentivize, support and reward home energy improvements.
It follows the Green Home Finance Innovation Fund in 2019, which supported companies like Monmouthshire Building Society and Lloyds Banking Group to develop online home energy saving tools and green mortgages. They help customers determine the energy efficiency of their homes and create an individualized plan to improve it, with additional loans at preferential rates for existing customers and tailored green mortgages for new ones.
Notes to Editors
- Funded by £1 billion BEIS Net Zero Innovation Portfolio, the Green Home Finance Accelerator program (GHFA) the competition is open for applications today (October 18, 2022). There are no restrictions on the types of organizations that can apply except that they must be UK based companies; however, applicants must demonstrate that their project proposal will lead to a viable green finance product and that they have the resources and expertise to do so. Consortia of different partners (eg lender and energy efficiency supplier, installer or consultancy provider) are encouraged. Information about the competition, including the application form, guidance documents and other resources, is available from the GHFA website.
- the GHFA focuses on encouraging proposals for new and innovative financial products and services that the market is unlikely to provide on its own, and that will target and support the types of consumers less well served by green finance offerings existing
- the costs and savings of energy efficiency and low carbon heating measures will vary by property type and size. Likely bill savings will also be influenced by fluctuating energy prices, and the costs and savings detailed above are indicative only. Individual homeowners and households can use the government’s new digital energy efficiency advisory service to assess their home’s efficiency and determine appropriate upgrades. Through the advisory service, households will be able to obtain information on the estimated costs of installing any recommended improvement, how much a measure could save on household bills, and information on next steps if they wish to make the the improvements.
- the typical UK property price was £273,751 per Nationwide in August 2022.
- a price study commissioned by BEIS demonstrated a 5% increase in the land value of homes with a EPC C band rating, compared to those with a EPC Band D, when the size and archetype of the building have been checked. Similar price advantages have been identified by a study commissioned by the Monmouthshire Building Society as part of their BEIS financed the Green Home Finance Innovation Fund project
- find more information on the Boiler Upgrade Program and how to apply