Nationwide Building Society has set aside £1bn to help borrowers buy energy efficient properties as well as providing loans to home owners wishing to make older houses more eco-friendly.

The lender is planning to offer a range of “green mortgages” with preferential interest rates for borrowers who buy new-build properties with an energy performance certificate rating of “A”.

It has also pledged to offer loans of up to £25,000 starting at an interest rate of just 1 per cent for the first two years to home owners who want to retrofit existing properties with energy efficiency measures.

Chief executive Joe Garner has called on the government to consider reforming Council Tax in order to encourage home owners to make their homes greener.

He is also urging ministers to look at whether the Help to Buy scheme could be reformed to incentivise house builders to make properties more energy efficient.

Garner says: “Nationwide Building Society’s core social purpose is to help people into a place fit to call home. There is now also an urgent imperative to reduce carbon emissions from those homes.

“On behalf of our members we are calling for government, house builders and lenders to work together to make a significant contribution to achieving a net-zero carbon footprint.”

Garner adds: “Our suggested reforms are about creating meaningful incentives for people to green their homes. 

“It’s not about penalising those in society who are least able to pay or putting the burden on local authorities.

“This is the greatest mutual challenge we face, and we will only make a difference if we work together.”

Green Finance Institute chief executive Dr Rhian-Mari Thomas says: “Developing the market for financing net-zero carbon and climate-resilient homes is a key objective of the Green Finance Institute’s Coalition for the Energy Efficiency of Buildings.

“We welcome the leadership shown by Nationwide in supporting homeowners and consumers with innovative financial products.

“Nationwide is one of more than 40 members of our Coalition which spans the UK Government, private sector and civil society working collaboratively to launch scalable financial solutions during the course of this year, building on market insights and consumer research that are due to be released over the next few months.”