Why brokers are key to the green agenda
May 2023
Jonathan Stinton, Head of Intermediary Relationships, highlights the role brokers can take to progress the green agenda.
The need for environmental changes affects all industries. But with 21% of the UK’s carbon emissions coming from homes[1], it’s crucial that the housing industry, lenders, trade bodies and the government work together to further promote and progress the green agenda to meet the Government’s Net Zero target by 2050.
As the industry takes these vital steps, brokers, who are trusted experts for many homeowners, will inevitably play an integral role in educating clients on the green initiatives available and raising awareness of legislation which might affect their homes.
However, with different policies impacting different clients, a one-size-fits-all approach won’t work for everyone. Brokers will need to guide clients through the changing market and provide tailored advice on the types of green solutions that are based on clients’ individual needs and circumstances. So, what could clients need and want to know about green solutions and how can brokers help?
[1] https://energysavingtrust.org.uk/why-we-must-act-now-to-transform-inefficient-homes/
1. What’s the latest government regulation and who does it affect?
Green regulation in the housing industry is still a relatively new concept, so it’s likely that clients will rely on brokers’ advice and support to understand which policies have been introduced and how they could affect them.
With an estimated 59% of property in England and Wales having an EPC rating of D or below[1], the government has proposed regulation raising minimum EPC rating requirements of rented houses to Band C for new and existing tenancies. Brokers will need to ensure landlord clients are aware of the proposed EPC changes and confirm they have plans in place to meet the new industry standards, but there is no doubt that this will be a challenge for landlords, especially those who need to significantly raise their EPC ratings from E or below up to C. So not only do brokers need to ensure awareness, their guidance on how to improve energy efficiency will be essential.
2. Which green improvements are most effective and valuable?
After determining what the latest regulatory requirements are, the next step is helping clients understand which types of environmentally friendly improvements can help increase their EPC rating and how much they are going to cost.
Whilst the EPC changes are directed at rental properties for now, residential clients should also be interested in making green home improvements which could help to bring down energy costs and consumption as well as making their homes more attractive for future buyers.
There are a range of measures to improve energy efficiency and even the smaller, more cost-effective changes can have a big impact. This ranges from cavity and solid wall insulation to insulating tanks, pipes and radiators. In fact, the Energy Saving Trust estimates that little fixes, such as fitting a hot water cylinder with an insulating jacket, could save the average home around £35 in heating costs – the equivalent of 115kg of CO2.[2] Small changes like these could add up to a major reduction in heating bills, as well as help a client’s property to pass the proposed EPC rules.
There are also some more expensive, but effective measures clients can undertake to make their homes greener. Around 18% of heat loss occurs through windows alone[3], so replacing single glazed fittings with double or triple glazing can significantly reduce heat loss. But it’s essential to make sure they are draught proofed to avoid heat loss occurring around windows and doors which would otherwise reduce the effectiveness of these measures in improving energy efficiency.
If clients want to have the biggest impact on making their home environmentally friendly, they need to look at the way they source their energy. Looking at alternative energy sources, such as solar panels and air or ground source heat pumps, can be significant steps in creating a carbon neutral home for the long-term, even if they are more expensive at the outset.
Installing a ground source heat pump could cost as much as £19,000, but it could save an average of £1,000 on an energy bill per year[4].
3. What support is available from the government and lenders?
“According to the Climate Change Committee, £250 billion will need to be invested to improve the UK’s 29 million energy-inefficient homes. This is a significant investment which cannot be made by the public sector purse alone. Private finance has a crucial role to play in decarbonising the UK’s housing stock. With 28% of homes in England owned with a mortgage or loan, mortgages will be a vital source of finance for those looking to better insulate their homes and cut their energy bills. With the number of green mortgage products increasing from four in 2019 to over 50 today, customers are increasingly being rewarded for owning energy efficient homes, but more innovative products need to be launched for consumers investing in energy efficiency upgrades. As trusted advisors, mortgage brokers will play a key role in supporting customers looking to make energy efficiency upgrades to their homes.” Rachael Hunnisett, Green Mortgage Campaign Lead, Green Finance Institute
The cost of making eco-friendly home improvements could add up, especially for landlords with more than one property to upgrade. The good news is that there is a variety of green solutions and schemes now available in the market to help clients fund sustainable home improvements, including government grants and green mortgages.
These include things like the Energy Company Obligation and the Great British Insulation Scheme available for low-income and vulnerable households, and some lenders have also started to launch green products and incentives to reduce costs for homeowners. At Coventry Building Society, eligible clients can apply for the Green Together Reward which offers £500 in return for carrying out qualifying work that aims to improve a property’s energy efficiency when taking out a new mortgage, whilst other lenders offer better interest rates for properties with an EPC rating of A or B.
With new green products and regulation expected to shape the housing industry in the coming years, brokers will be fundamental in helping clients understand which solutions are a good fit for them. Brokers are in the best position to provide homeowners with ongoing, bespoke advice, suited to their individual requirements and budgets and ultimately helping clients improve the energy efficiency of their homes.
[2] Measures to help reduce home heat loss - Energy Saving Trust
[4] https://energysavingtrust.org.uk/air-source-heat-pumps-vs-ground-source-heat-pumps/
