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Halifax now lends more on homes with better EPCs
Halifax has thrown down the gauntlet to other mortgage lenders by directly linking borrowing capacity to a property’s energy efficiency. Those seeking a mortgage for an energy-guzzling home may find their loan options limited, while buyers of eco-friendly properties could unlock larger loans. This bold move signals a shift in the mortgage landscape, where green credentials are no longer just a ‘nice-to-have’ but a key factor in affordability.
Halifax, a major UK mortgage lender, has announced it will now factor energy efficiency into its lending decisions. This means borrowers purchasing energy-efficient homes (with high EPC ratings like A or B) can qualify for larger mortgages. Conversely, those buying less efficient homes (with EPC ratings of F or G) may see a slight reduction in their borrowing capacity.
This move acknowledges the impact of energy costs on affordability. Halifax aims to reflect the lower running costs of energy-efficient homes by allowing buyers to borrow more, recognizing that they’ll have more disposable income after paying their energy bills.
This decision is based on extensive analysis of EPC ratings, energy transactions, and mortgage data. Currently, around 15% of UK homes have an EPC rating of A or B, while only 3% fall into the lowest categories of F or G. Homes with EPC ratings of C, D, or E will not be affected by these changes.
Halifax is part of Lloyds Banking Group, which also includes Lloyds Bank and Bank of Scotland. The group already encourages energy-efficient home improvements through its Green Living Rewards scheme, offering cashback on upgrades. They also provide incentives for installing heat pumps, solar panels, and insulation through various partnerships.
However, financial expert Alice Haine of Bestinvest points out potential downsides to this approach. She warns that prioritizing energy efficiency could create a two-tier market, favoring those with newer, more efficient homes or those who can afford expensive upgrades. Older properties requiring significant investment might decrease in value, potentially discouraging homeowners from selling and creating stagnation in the market.
This video tells you all you need to know about EPCs:
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Riz is the founder of homes2let and has been in real estate for over twenty years. He has a background in economics and is a real estate developer and buy to let investor.
You can get in touch with Riz via riz@homes-2let.com.
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