Black may be the colour of choice of fashionistas everywhere, but green is the hue that politicians and bandwagon-jumpers are interested in.
I am writing this before the Budget and, even without a crystal ball, it’s a fairly safe assumption that the environment will feature heavily. Tory leader David Cameron is trying to make ethical issues his own, but the government is determined to reclaim this ground, hence all the arguing about green taxes on air travel.
On the housing front, there has been plenty of noise about the environment. The ill-fated Home Information Packs have gone from their initial aim of speeding up property purchases by providing Home Condition Reports, valuations and searches to focussing on environmental issues. Only Energy Performance Certificates survive, with their concentration on issues such as the number of energy-saving light bulbs a property has.
As Mortgage Strategy’s cover feature this week explains, in the pre-Budget report in December the government announced that all new-build homes must be carbon-neutral within a decade. Admirable perhaps, but developers have questioned whether this is commercially viable. The other problem is that the focus is on new homes, not existing ones. Some 70% of the existing housing stock will still be around in 2050 – and it won’t be carbon-neutral.
The media regularly revisits green mortgages, questioning the availability of green loans. The only problem is that the story never moves on and the same names are bandied about, with Norwich and Peterborough, Ecology and Co-operative Bank being the same green stalwarts. It’s interesting that more lenders have not embraced the green market, given that borrowers are increasingly aware of climate change and are likely, at some point in the house buying process, to want to do something to help.
Part of the problem is that nobody can agree what a green mortgage is. Earlier this month, Baroness Hanham posed this question in the House of Lords. The response was that the market is still developing, but the “ultimate objective [is to reduce] negative impact on the environment”.
Lenders approach it differently – the Co-op is generally ethical, screening all business partners through its ethical policy unit, while N&P plants 40 trees for every green home loan taken out. Ecology uses deposits to grant mortgages on properties and projects that help the environment. UCB Homeloans recently entered the fray, launching a long-term programme of initiatives on environmental issues, although it hasn’t yet said much more than that.
The government is leaving it to lenders, which is fine in one respect, as the last thing we need is another paper like Professor David Miles’ report – it will only take an age and then tell us what we already know.
What we need is a big high street lender entering the market with a green mortgage. This will encourage others to follow suit, which will lead to lower rates of interest. They don’t have to be the cheapest on the market, but in a rate-driven market they could do with being lower.