Energy efficiency requirements could slow down the housing market
The housing market may be blocked by government plans to force buyers to improve the emergency efficiency of their new homes depending on the terms of their mortgage.
Property Mark, the professional body that represents rental agents, said the requirements – which have yet to be defined in detail – could initially deter people from moving.
Mortgage lenders will have to disclose the energy efficiency of the homes they lend money for, plans released Tuesday said.
Lenders will also need to set goals to improve the insulation of homes on their books.
Plans have been included in the government’s roadmap to reduce CO2 emissions by up to 70% by 2030.
The plans could initially make older properties harder to sell, Property Mark policy and campaign manager Timothy Douglas told CityA.M.
Homebuyers could have to invest thousands of pounds in home improvements, which could create “significant hurdles,” Douglas said.
Mark Harris, managing director of mortgage broker SPF Private Clients, said there was “growing momentum” behind the green revolution.
Landlords will also be required to ensure that properties in new rentals must have an EPC AC rating.
“Without the right incentives, these costs are likely to be passed on in the form of higher rents. Lenders such as Leeds and Landbay are already offering green mortgages for rent, others are expected to follow suit, ”Harris added.
“Without changes or improvements, lenders can restrict loans to a lower loan-to-value ratio, higher prices, or no loan at all. This could penalize those who are unable to adapt or adopt new efficient technologies economically and potentially create the next round of mortgage prisoners. “
Simon Gammon, managing partner of Knight Frank Finance, said the current discounts on green mortgage products are currently “pretty low”, with savings in the hundreds, not thousands, to be made.
“More and more, what we’re going to see is a price differential between an efficient house and an inefficient house being re-mortgaged.”
It will be an incentive for homeowners to improve their properties every time they remortgage, Gammon added.
Homeowners will also be able to apply for a £ 5,000 grant to install a heat pump from next year, as part of a ‘boiler upgrade program’ to cut emissions.
The National Residential Landlords Association (NRLA) has asked the government to confirm whether homeowners will also be able to apply for these grants starting next year.
“Eighty percent of private rented households have gas central heating and replacing such systems will be both expensive and vital to achieving net zero,” said NRLA boss Ben Beadle.
“Once again, private owners are waiting for the government to publish details of the standards they will be required to meet, the deadlines they must meet and how this work is to be financed. “