Climate change is such a global issue that it’s easy for individual homeowners to think that their own sustainable choices won’t make much difference.
But with an increasing number of climate friendly mortgages coming into the market, including Danske Bank’s own Carbon Trust-certified Carbon Neutral Mortgage, it’s clear that sustainability is both a priority for lenders and of benefit to both the homeowner and the environment.
Any property for sale needs an Energy Performance Certificate to show its energy efficiency and emission levels. EPCs aren’t perfect, but they’re a useful comparison tool, ranking homes from A to G (best to worst).
Our research into our own mortgage portfolio in Northern Ireland shows that a G rated property’s emissions may be up to seven times greater than a B rated one.
Lower Energy Costs
The second benefit of choosing a more sustainable home is lower energy costs.
A property’s emissions are linked to its heating system (oil and gas) and its thermal efficiency.
ONS research for England shows that the median energy costs of a G rated property are almost 4.5 times higher than a C rated property (and if you compare this to a B rated property, almost 6.5 times higher).
That converts to a saving of almost £2,000 a year (or £167 per month) between a G rated property and a B rated property – which raises an interesting question as to whether homebuyers should be taking the EPC into their own affordability considerations.
House Price Rises
Sustainability has already had a bearing on long-term property values, with Cambridge University research suggesting an A/B rated property being worth 14% more than a G rated equivalent.
In the medium to long term, the risk of not addressing this challenge is that a house could end up becoming what’s known as a stranded asset – one that is so severely impacted by climate change that its value falls significantly.
Let me give you an example – my last house was a 3-bed semi in east Belfast. It was built in the mid-1920s and was single skin red brick with no cavity and not even any felt between the roof slates and the timbers. It had an EPC rating of F - very costly to improve significantly. That house has the potential to become a stranded asset as it could be too expensive to run, too costly to improve and ultimately too high a risk to lend money against.
This is why it’s increasingly important for homeowners to understand the potential improvements they can make to their property – not to just reduce their energy costs, but to protect against any valuation variance in the future.
We’ve just partnered with the Energy Saving Trust to launch a tool which helps homeowners estimate their current EPC, energy costs and carbon emissions and helps them understand how they can improve each of those areas.
Recently it was also announced that the Government is planning green levies from electricity to gas bills as part of a plan to accelerate the move away from fossil fuels, which of course have risen very significantly in price in the last few months already.
No matter how you look at it, it’s worth making changes now, whether small or bigger with an eye on the long term, to make your home more sustainable and energy-efficient in the future.