Cheap ‘green mortgages’ to foster energy-saving homes

Jonathan Leake

The government is to offer “green mortgages” to fund the installation of solar panels, wind turbines and other energy-saving measures.
Households will be able to take out the low-interest loans to pay for double-glazing, loft and cavity wall insulation and even heat pumps, which extract energy from below the ground.
The scheme, which will be announced this week alongside the government’s renewable energy strategy, could transform the urban landscape as ministers try to encourage homeowners to reduce carbon emissions.
It could mean, for example, traditional roofs being obscured by solar panels, wooden sash windows being replaced by double-glazed units and wind turbines sprouting from the tops of suitable buildings.
Even listed properties, or those in conservation areas, could be affected with the government considering easing planning restrictions to allow for energy saving measures.
Householders who refuse to take part in the scheme could face higher council tax rates and, when they sell, the threat of raised stamp duty for prospective buyers.
Ministers want to cut the 150m tonnes of carbon dioxide generated by Britain’s 26m homes to less than 30m tonnes by 2050.
“Britain has pledged to cut carbon emissions by 80% between now and 2050 so we need to cut the emissions from each home to almost zero,” said David Adams, chairman of the UK Green Buildings Council.
Adams heads a government-backed taskforce that will propose the “green mortgage” scheme in a report to be published on Tuesday.
It will be backed by Ed Miliband, the energy and climate change secretary, who wants 7m homes to have undergone the energy upgrades by 2020, with the rest by 2030.
This weekend it also emerged that the renewable energy strategy is likely to add £200 to the average household’s utility bills. The strategy paper will say Britain needs to spend more than £100 billion on renewable energy infrastructure by 2020, including 7,000 wind turbines. This money will come from a levy on energy bills, which will have to rise by about 20%.
The green mortgages are expected to be made available by high street banks in partnership with local councils.
Householders may be encouraged to take out the loans by a temporary reduction in council tax, which may also be increased if they refuse.
The loans, likely to average between £10,000 and £15,000 for each home, would be secured by a charge on a property, repayable over periods of up to 25 years. If a resident sold the house, the charge would stay with the new owner.
Ministers believe this will not disrupt the housing market. “The aim is to make the monthly repayments so small that they will be outstripped by the savings on energy bills – meaning householders will actually save money by taking the loans,” said Adams.
Ute Collier, of the Committee on Climate Change, the government’s independent adviser, calculated that the owner of a typical three-bedroom Victoran end-of-terrace home, with three exposed walls, could expect to spend £10,280 on a package of energy-saving measures, along with a new boiler.
This would cost the householder £514 a year in repayments over 20 years, assuming a zero interest rate, while the savings on energy would total £802, a yearly “profit” of £288.
Alternatively, they could spend £32,180 on a top-of-the-range energy efficiency package with deluxe double-glaz-ing, insulation on every external wall, plus solar panels and a ground source heat pump.
This would cost £1,609 a year in repayments over 20 years, compared with annual savings on bills of £1,400. Although this appears a loss, the work could increase the value of the property and be a safeguard against future energy price rises.
Adams believes that an army of contractors could be hired to carry out energy saving measures street by street. He likens it to having an Olympic-sized building project every year for the next 20 years, generating about 50,000 jobs.
However, critics fear that a national insulation programme will see the destruction of many period features, such as Victorian sash windows, which are aesthetically pleasing but inefficient.
“This has to be done sensitively,” said Adams. “Sash windows and other period features can be improved rather than destroyed.”
The green mortgage plan is likely to irritate the Conservatives who announced a similar scheme for raising domestic energy efficiency months before the government.
Greg Clark, the Tory energy and climate spokesman, said: “It’s annoying to see our policies stolen like this but I feel proud that Miliband is a convert to recycling our ideas.”
The government will also introduce measures this week to restrict emissions generated by Britain’s 2m commercial and public buildings. These buildings produce about 80m tonnes of CO2 a year.