Plan to link mortgages to green standards will hurt first-time buyers, government warned

Boris Johnson forcing ‘innocent first-time buyers’ to pay for failures, say Lib Dems

Adam Forrest
Tuesday 19 October 2021 19:40
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Boris Johnson says private sector 'trillions' key to tackling climate crisis

Home buyers could soon be asked to improve the insulation of their properties as part of their mortgage requirements under plans announced by Boris Johnson’s government.

Mortgage lenders will be asked to disclose the energy efficiency performance of homes in their portfolio – sparking fears it could deter banks from lending to people hoping to buy “leakier” properties.

The announcement has prompted warnings that first-time buyers may struggle to obtain mortgages unless they pay for costly upgrades to prospective homes.

The Lib Dems urged the government to ditch the move. “This is an insult to first-time buyers who have scraped and saved to get on the housing ladder,” said leader Sir Ed Davey.

He added: “The Conservatives must cancel this plan immediately. Ministers are attempting to clean up their own mess by forcing innocent first-time buyers to fork out thousands of pounds extra, just as an interest rate rise is about to bite.”

UK Finance – the body representing mortgages lenders – warned the government that its proposals could lead to a “two-tier market” by pushing some homeowners in negative equity if they cannot afford insulation improvements.

“New and newer-build properties are likely to have better energy performance – it could be much more difficult to bring older properties up to standard in a cost-effective way,” UK Finance stated.

The mortgage lenders group warned against “unintended consequences that might trap owners in poorer performing properties or create a two-tier market where borrowers pay more but have less choice”.

But Downing Street denied that the plans to boost energy efficiency would punish those attempting to get on the property ladder.

Mr Johnson’s official spokesperson said the aim of the scheme was “to catalyse the development of the green finance market”, adding: “We would only introduce a policy which was guided by fairness for the public.”

On Tuesday the government set out its proposals to encourage green home improvements in its heating and building strategy, alongside its wider plan to achieve net zero emissions by 2050.

The strategy revealed that ministers are considering “mandatory disclosure requirements for mortgage lenders on the energy performance of homes on which they lend”.

The government will also set voluntary improvement targets for mortgage lenders to make sure their properties have an average EPC band of C or better by 2030.

The document said the government reserves the option of making the target mandatory if “insufficient progress is being made”. Only 40 per cent of homes in the UK currently have a C energy rating or above.

Mr Johnson’s government said it would also “consider” whether to set a date for all homes to meet minimum energy standards ahead of the 2050 net zero target.

Meanwhile, the government came under fire over plans to hand out £5,000 grants to help residents replace their gas boilers with green heat pumps.

But just 90,000 of the UK’s 22 million gas-heated households will benefit in a plan branded “inadequate” by environmentalists.

Labour also said the plan “falls short” of action need to deal with the climate crisis, calling for a “long-term” plan to retrofit Britain’s homes.

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