Mortgage alert: Homeowners may have to fork out thousands to improve homes in new rules

Boris Johnson outlines plans to hit net zero

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Under new Government plans to decarbonise Britain’s housing stock, ministers are planning to encourage mortgage lenders to lend more on top of the price of the property to cover the cost of carrying out green improvements.

MPs are discussing proposals to add the cost of going green to the price of mortgages with the promise of cheaper bills.

It is likely to be met with caution from buyers who may find it more difficult to get a mortgage as it could cost them thousands of pounds more.

It is thought the proposals will be announced at the Global Investment Summit later today press reports have said. The plans form part of wider proposals to reduce CO2 emissions by nearly 70 percent by 2030.

Sarah Coles, personal finance analyst at Hargreaves Lansdown said it could cost homeowners more.

“It means anyone getting a mortgage could be encouraged to borrow extra cash for energy efficiency improvements as part of the deal.

“The problem is that while some properties can be improved at relatively little cost, other homeowners will find it prohibitively expensive.

“They may not be able to afford to borrow more, or the cost of changes to older properties may be disproportionately high, so they’d never recoup the cost of the improvements through a sale.”

Presently, an Energy Performance Certificate (EPC) is required when a home is built, sold or rented.

Properties are given a rating with A awarded to the most efficient homes – in comparison a G is given to the least efficient.

It would mean that lenders would have to get properties up to a C rating – currently only 40 percent of houses have a C rating or higher.

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Meanwhile, in a speech to the Global Investment Summit in London earlier today, Prime Minister Boris Johnson said the consequences of global warming would be far worse than the coronavirus pandemic if Britain did not act now.

He added that we “need to move beyond coal” and “end our dependence” on internal combustion engines in cars as well as plant “zillions” of trees.

The Prime Minister also announced that homeowners will soon be able to apply for a £5,000 grant to install a heat pump instead of a gas boiler.

The new £450million Boiler Upgrade Scheme is part of the Government’s plan to cut carbon from heating and buildings and will start to roll out from April 2022.

The Government is working towards all new heating system installations to be low carbon by 2035, with no new gas boilers sold after this point.

Although the £5,000 subsidy won’t cover the entire cost of one of these systems – thought to be around £10,000 – it could make the more expensive heat pumps more appealing with a price similar to that of a brand new boiler.

Anne-Marie Trevelyan, Secretary of State for International Trade told Sky News’ Kay Burley this morning that this will help the Government meet its net-zero challenge.

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She said: “This is a journey we are all on together. The Prime Minister is committed to giving a framework that means we can all participate as citizens in helping meet that net-zero challenge.

“£450 million is committed over the next three years and it will help those who really want to crack on to give them effectively a cost neutral opportunity to change the gas boiler they have now.

“This could be to a heat pump or to some other form of green energy solution, as I’ve done with a hydrogen ready boiler.

“I think this is a great first programme, but for those most in need there is already a huge local authority scheme underway.”

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