In consultation with the Green Finance Institute (GFI) and ERC members, The Retrofit Lifetime Mortgage Guidance is designed to support product development and encourage broader discussion within the industry.

The Council hopes the guidance will help the industry find ways of tackling the UK’s ageing housing stock and meeting the government’s ambitious net zero targets.

It says the rising demand for more energy efficient homes presents a significant growth opportunity for the equity release market. 

It would like to see more borrowers supported by retrofit lifetime mortgages alongside specialist advice.

The new guide sets out good practice in this emerging sector, including how to protect borrowers and what brokers and lenders need to consider.

Within the guidance, the Council has proposed a customer journey for the process of taking out a retrofit lifetime mortgage. 

This differs from the traditional lifetime mortgage journey with the addition of an initial retrofit assessment and a retrofit coordinator to support the delivery and validation of the completed works to deliver intended carbon reductions. 

These extra steps are designed to safeguard the customer and to ensure that all green property improvements meet high standards.

All equity release lenders are being encouraged to review the guidance and use this information to shape new products and review their existing offers.

ERC head of risk, policy and compliance Kelly Melville-Kelly says: “As the representative trade body for the equity release market, we want to champion its potential and ensure that it continues to meet the needs of as many customers as possible. 

“We hope that the guidance we have outlined can help to accelerate efforts to innovate in the later life mortgage market and deliver a decarbonised housing market which future generations will benefit from.

“It is essential that we all play our part to reduce the carbon footprint of our homes and retrofit the UK’s ageing housing stock. 

“As well as reducing carbon emissions, using equity release to make green home improvements can also lower customers’ energy bills, future-proof their home and even add value.”

Just Group managing director of retail Paul Turner adds: “Energy efficient homes are better for the people who live in them and good for the planet, but the UK’s housing stock is one of the least energy-efficient in Europe. 

“Just Group believes equity release mortgages have an important role to play in helping people retrofit their homes to make them more energy efficient.

“Energy efficient homes are more comfortable to live in, cheaper to heat and have a lower carbon footprint – retrofit mortgages enable customers in later life to enjoy these benefits and in many cases improve the value of their home.”