First up, when it comes to improving the energy efficiency of our homes, I can safely say there will be few within our industry who don’t want to help homeowners do just that and are more than willing to take part in the march towards achieving this.
Having said that, there has to be an acknowledgement here that no one part of our sector can do this on its own. This is a multi-faceted issue and as a result is going to need a multi-faceted series of solutions, with significant input from the government in order to push it along.
It is not going to be enough for the government to think it can simply pass this ‘problem’ on to lenders to deal with. At the moment, given the level of government grant available, and the small number of grants, that appears to be where it’s initial focus lies.
Effectively, it’s an approach which says to lenders, “You lend on these properties, they sit on your balance sheets, and therefore you need to make decisions about which properties to lend on in the future based on the EPC levels you see. Any property which doesn’t make the grade can’t secure a new mortgage.”
That, to me, not only smacks of kicking this particular can down the road and into the long grass ‘owned’ by lenders, but it also appears dangerous. Lenders might do all they can to encourage owners to improve the EPC levels of their properties, but at the end of the day, this is going to cost money, perhaps a large amount, and the benefits of spending that money might not be overly clear.
And, what happens at an arbitrary deadline in the future? Will the government say that, by 2030-35, for example, all properties must have an EPC level of C otherwise they won’t be eligible for a new (re)mortgage? At that point, we will be in danger of developing a new generation of ‘mortgage prisoners’? After all, we’ve not been particularly good at helping those already within this bracket.
What about those properties who currently languish in the lower levels of the EPC ‘charts’? What is it going to take to move those upwards a level, let alone two/three/four? We are dealing with a housing stock in this country which was predominantly built either in the early part of the 20th Century, or in the post-war period. Energy efficiency levels were not a massive consideration back then – it was more about getting a roof over people’s heads.
Therefore, it’s clearly going to take a lot more than saying to people, ‘Buy a heat pump’ and we’ll give you a £4k grant, and if it costs you £12-15k for the equipment and an extra £10k for the insulation in order to get your EPC rating up, well then I’m sorry you’ll just have to stump up the cash yourselves. Offered that option I’m sure most owners will simply do nothing and await the consequences.
So, it’s clear there’s a lot of work to be done here. Firstly, it’s clear we have a major knowledge gap to span firstly in terms of homeowners and the EPC – are they clear what it is, what the ratings are, how they can improve, etc? From the initial research I’ve seen, many appear not clear at all.
We need to be pushing this information out now. If there is a deadline in the future, what can owners do every year to push that level up? Are there steps to EPC ‘heaven’? Can we as an industry educate now, and point them in the right direction in terms of determining where the property currently sits, what could be done, and how much it’s going to cost?
Can we drop those ‘green mortgage’ elements into every single mortgage product, so it’s not an option but a given with every product sold. Cashback availability perhaps and a timetable to follow in order to improve energy efficiency in ways which might not be overly expensive and perhaps can secure the government grants available?
And, on that very point, I think it’s going to be blatantly obvious to all, that this can’t just be left to lenders to sort based on the mortgages they do or don’t offer. The government is probably going to need to significantly up its intervention and the money available for homeowners in order to get going on these improvements, otherwise the likelihood of anyone starting on this journey are slim.
Essentially, I would hope the government can, with the support and input of the industry, formulate a strategy to take us from now to the place they want our housing stock to be. It can’t be piecemeal and neither can it be left to lenders to wield some sort of stick, without having access to the carrot. Homeowners will need to have their hands held through this journey, and advisers can play a full role, but the direction of travel will need to be set by those in power. The sooner they do that, the better.
Jo Carrasco is business partnerships director at Stonebridge
