The public are increasingly conscious of their carbon footprint and how to reduce it, yet with 40% of the UK’s emissions and 15% of the UK’s greenhouse gases (GHG) coming from households, many are failing to consider the benefits of bolstering the energy efficiency of their homes.
Here, we explore the critical role that building societies have in changing that attitude, and explore the green home finance initiatives driving improvements in the energy performance of mortgaged properties.
With energy efficiency taking centre stage more and more, the British property market is garnering greater attention than ever before.
While once the environmental debate centred on emissions from heavy industry, polluting vehicles, and global travel, the introduction of climate change treaties such as the landmark Paris Agreement has broadened the scope, bringing with it a sharper focus on the UK’s housing stock.
Decarbonising and adapting the UK’s housing stock is critical for meeting legally-binding emissions targets by 2050. Yet, despite growing interest in environmental issues, consumer awareness of green mortgages remains low, and uptake has been negligible so far. Indeed, an alarming 43% of consumers have never heard of a green mortgage.
While highly competitive interest rates, and financial incentivisation for homeowners able to attain improvements in their EPC ratings, may bolster adoption of green mortgages, until members are able to see a direct correlation between green products and a lowering of their energy bills, the adoption of such solutions is likely to remain low.
It is clear, therefore, that a certain degree of education will be required by lenders who want to play their part in helping customers reduce their home energy consumption.
Building on the initial green shoots
To aid customers in reducing their home-energy consumption – and enable existing members to access additional funding to carry out green retrofitting improvements to improve their EPC rating – building societies are getting increasingly creative in their green product delivery.
One such original product, being delivered by Hinckley & Rugby Building Society, is a prime example of the value of cross sector partnerships, and the associated synergy of specialisms and market knowledge.
The society is working with IRT Surveys, one of the fastest growing thermal imaging and net-zero software specialists in Europe, to explore how additional data can help members to understand the current position of their properties and what it is they need to do to make them more energy efficient.
By aiding members in gaining an in-depth understanding of what areas in their homes are inefficient to improve energy ratings, and in turn their overall energy performance, the importance of reducing carbon emissions can be better highlighted.
Amidst calls to combat ‘greenwashing’ in the green finance market – led by a string of new measures issued by the Financial Conduct Authority (FCA) – building member trust and assuring consumers that their products are truly “green” has become imperative for building societies.
Green mortgage are hailed as a way to support the objective of not only reaching carbon zero, but also educating members on what it means to them.
By bringing previously unseen insights and expertise through an impartial third party expert like IRT Surveys, Hinckley & Rugby Building Society will be able to more effectively educate members and build their trust.
A new initiative
Initially being rolled out across 100 homes – with plans to contact all of its mortgage customers for a wider roll-out – the survey will utilise impartial thermal performance analysis, energy efficiency evaluation and dedicated software to report on the homes and explain what will be required to get to ‘net carbon zero’.
Such a progressive approach, it is envisaged, will help members discover energy-saving opportunities at pace, make smarter retrofit decisions, and access net-zero funding faster.
Members will be able to discover energy inefficiencies, understand the investment needed to remedy them, and find out whether it will deliver a Return on Investment (ROI) before commencing a large scale retrofit or refurbishment project.
The result will be a service which will allow the borrower to understand the roadmap to improving and retrofitting their home.
Shared insights to drive change
Hinckley & Rugby Building Society recognises that providing support and information to its members on reducing carbon emissions will remove a significant barrier to the uptake of green mortgages. It is hoped that this scheme will set a new precedent for the mortgage market.
Despite a ‘massively underestimated’ demand for sustainable homes from prospective buyers across the UK – with 78% believing that purchasing a ‘greener’ home would have a positive environmental impact, and 92% positive about making such a purchase – financial providers have been criticised for a lack of action in this area.
A green outlook
As a forward thinking institution, Hinckley & Rugby Building Society remains at the forefront of sustainability and green initiatives. It was the first UK building society to undertake carbon literacy training approved by the Carbon Literacy Project, with almost 10% of the workforce undertaking training to build knowledge and awareness of climate change, and the ability and motivation to reduce emissions.
“As chair of the Building Societies Association Green Finance Task Force, I am particularly proud that Hinckley & Rugby Building Society staff have been able to benefit from this valuable training, which, when combined with the results of the IRT Surveys reviews, will enable them to speak with confidence and knowledge to our members on this important topic,” said Colin Fyfe, chief executive of Hinckley & Rugby Building Society.
What’s more, the building society is striving to reduce its own carbon footprint and has had an independent report commissioned which it will use as it endeavours to become carbon neutral.
