Homeowners are missing out on lower energy costs, higher property values, and more comfortable homes because of a lack of easy-to-access, affordable finance to invest in energy efficiency improvements.
This is according to E.ON UK CEO Michael Lewis (pictured) speaking today at the launch of the Energy Efficient Mortgages Pilot Scheme.
The aim of the Energy Efficient Mortgage is to create a loan product for homebuyers to buy an energy efficient property or to improve the energy efficiency of their home. They will be incentivised by access to a cheaper mortgage.
The assumption is that if a property is energy efficient, utility bills will be lower so a borrower will have more money to service the loan; plus the value of the property will rise.
Lewis referred to a briefing paper published last September by the UK Energy Research Centre and University of Sussex Centre on Innovation and Energy Demand.
The research found that if British homes could reduce their energy demand by a quarter, an estimated saving of £47 billion could be made. This would save UK households £270 each year off the average household energy bill of £1,100 – a saving that is equivalent to the output of six nuclear power stations the size of Hinkley Point C.
Lewis said: “Energy is the lifeblood of modern life. Getting energy right enables wellbeing for all and unlocks a more productive, efficient economy.
“We need to find ways to radically increase interest and action on energy efficiency but property owners face a significant financing barrier when wishing to improve energy efficiency. In the UK, attempts have been made to tackle this barrier through schemes like the Green Deal, but they have failed in part as they weren’t designed with simplicity at the heart and with the customer front and centre.
“Green mortgages have the potential to be a game changer in the delivery of affordable finance and we are ready to meet the challenge for home-owners motivated to take the step into energy efficient living.”
Lewis added: “Radically improving the energy efficiency of the UK’s housing stock – which is already among Europe’s oldest and least efficient – should be a national infrastructure priority. Customers living in the most energy efficient homes are seeing hundreds of pounds of savings on their heating bill year on year, yet figures show around 19 million properties fall short of EPC level C, which is equivalent to 71% of the UK’s 27 million homes.”
Together with 35 banks and 23 other interested parties, E.ON is the only energy company developing the Energy Efficient Mortgages Initiative.