30 March 2023

See the bigger picture on sustainability

By Nicola Goldie, Head of National Accounts at Virgin Money

You already know about plans to tighten EPC rules for landlords, but that’s just one part of the green housing revolution, says Nicola Goldie, Head of National Accounts at Virgin Money.

You can’t have escaped the running commentary about potential changes to Energy Performance Certificate (EPC) rules for landlords and how it will impact them and the private rental sector. 

It represents a potentially huge challenge to landlords.

But, beyond this looming rule change, is a broader and deeper focus on sustainability across the housing and mortgage markets. It will lead to large-scale change in the next 10 years and beyond.

And it will affect all homeowners, not just landlords.

Why it’s happening

Climate change is already affecting people and habitats around the world, and it’s set to get worse. The Intergovernmental Panel on Climate Change’s latest report said, “without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5C is beyond reach”.

The UK Government has pledged to hit net zero by 2050 – a challenge that’s only possible if the housing sector steps up. Our homes contribute 14% of UK carbon emissions (4mb pdf) and our industry has a responsibility to support the net zero target.

What’s changing now

Potential new legislation will make it mandatory for both builders and landlords to boost the energy efficiency of residential properties.

It’s proposed that new tenancy agreements in the private rented sector will only be allowed on properties with a minimum EPC C-rating.

In 2025 the Future Homes Standard will also be introduced to complement building regulations. It aims to ensure that new homes produce at least 75% lower CO2 emissions compared with those built to current standards.

The Government wants to take a fabric-first approach to boosting the energy efficiency of new and existing homes. This means focusing on measures that upgrade the building fabric before making changes to the heating system.

The final Future Homes Standard rules and building specifications have not yet been published, but it’s expected that low carbon heat sources will become the norm.

What about the mortgage market?

There are more green products on offer than ever before, but many reward purchasers of energy efficient properties, rather than supporting those in less efficient properties to make improvements.

We’re likely to see more further advance products targeted at this sector as well as green buy-to-let mortgages designed to support landlords through the EPC changes.

Behind this change is the fact that the Government wants lenders to improve the average EPC ratings of their back books, according to its Heat and Buildings Strategy (15mb pdf) published last year.

Of course, lenders can’t act alone to make this happen; a joined-up approach across multiple industries and Government is needed.

At Virgin Money, we already have a range of green deals that offer a lower rate to those purchasing new build properties with an A and B rating.

The bigger picture

Virgin Money’s newly launched sustainable business coach has been designed to help small business owners, including brokers and your self-employed clients, to improve the sustainability of their own businesses, by offering practical, straightforward and actionable guidance.

We are on a journey to sustainability too. We have clear goals to reduce the negative impacts of our operations, suppliers and partners on society and the environment.

Find out more

If you’ve got any questions about our green mortgage range, get in touch with your Business Development Manager, or dedicated Regional Service Team.

VM36591 (valid from 21.06.2022)

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