Borrowers will be able to take out a bigger mortgage when buying greener properties for the first time. Due to a pioneering scheme to encourage more greener homes nationwide.

The move is one of several innovations being mooted to overcome householders’ inertia on energy efficiency, alongside tax cuts for greener homes.

Welsh government said the change should open up the housing ladder to more people, encouraging buyers to consider energy ratings.

Rebecca Evans, Wales’s housing minister, said: “We hope to see lenders follow our lead and making energy efficiency part of the mortgage consideration for all home buyers in Wales.”

The Building Research Establishment, which has undertaken research into green mortgages, said it hoped banks and building societies would wake up to the importance of factoring energy use into lending decisions.

Andrew Sutton, the group’s associate director, said: “My primary hope is that the mortgage industry reacts.”

He said lenders were aware there is a growing argument to factor energy efficiency into their decisions. In addition, they were nervous about moving first, and the costs of implementing the changes.

Barclays is one of the first to offer a green mortgage product, offering borrowers a discount on the loan’s interest rate on new-builds rated in the top two energy bands, A and B.

Such incentives could change the “my home is my castle” mindset that has held back efficiency improvements in privately owned homes, Sutton said.

In an effort to encourage householders to install insulation, council’s have offered tax discounts for greener properties.

Facts and Figures

  • Welsh help-to-buy loans will take into account the energy rating of new-build homes worth up to £300,000.
  • However, Sutton said the approach also had big potential for existing homes. For example, a homeowner wanting to borrow £10,000 extra on their mortgage for a loft conversion could potentially borrow more. In comparison, a home with an energy rating of C, can potentially borrow more then one with an E rating.
  • Affordability calculations could allow them to increase loans by £11,500 because buyers’ electricity and gas bills will be lower.

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[Article taken from The Guardian on 16/05/2018.]