Ahead of the launch of the Green Finance Strategy, the government today announced a £5 million fund to help the financial sector develop green home finance products, like green mortgages. Green mortgages give customers discounted mortgage rates once they have upgraded the energy rating of their home.
Today the government also announced it would offer the industry the chance to win a share of a £10 million innovation fund if companies design innovative ways of reducing the cost of retrofitting the UK’s old housing stock. This could include assembling parts of buildings like pre-fabricated roofs or facades off-site and quickly fitting them to homes, minimising disruption for homeowners.
It comes just days after the government became the first major economy in the world to pass laws committing the UK to net zero emissions by 2050. Tackling domestic emissions by improving the efficiency of the 17 million homes in the UK with an EPC below Band C will be essential to achieving this.
Energy and Clean Growth Minister Chris Skidmore said:
“To fulfil our world-leading commitment to reach net zero emissions by 2050, we need an overhaul of our housing stock to tackle the disproportionate amount of carbon emissions from buildings.
“By rolling out more green mortgages and reducing the costs of retrofitting older homes we’re encouraging homeowners to improve the efficiency of their homes and save money on their energy bills, helping to ensure everyone has access to a warm and comfortable home.”
Currently, homes are responsible for 15% of the UK’s carbon emissions, and as the UK moves to a net zero economy, the government has committed to making more buildings cleaner, greener and fit for the future.
The modern Industrial Strategy set out a vision to make the UK a global standard setter for finance that supports clean growth. Through the Green Finance Strategy, the government has committed to accelerate the development of green financial products. Funding will be awarded to innovative projects that incentivise energy efficiency retrofitting through the Green Home Finance Innovation Fund (GHFIF).
The GHFIF will support the development of lending products like equity loans and home improvement loans that will help homeowners make upgrades, for example offering energy efficiency advice, access to trusted installers and preferential mortgage interest rates to support them in making energy improvements to their homes.
Meanwhile, the £10 million Whole House Retrofit competition will help to find viable ways of reducing the cost of retrofitting homes at scale and at affordable rates, helping drive down costs for consumers and ensuring everyone has access to a warm home.
Green financial products and reducing the costs of retrofitting aim to offer innovative ways to reduce buildings’ emissions and supports householders’ efforts to move towards a cleaner, greener economy – a key part of the government’s modern Industrial Strategy.
Recognising that finance is the first step in making these changes, the government is asking the Green Finance Institute (GFI) to consider finance for buildings. Among the first of the GFI’s priorities will be addressing energy efficiency.