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Should house prices and mortgage costs be based on EPC ratings?

A new survey suggests two thirds of current or potential home owners would accept the idea of a mortgage interest rate based on their property’s EPC rating. 

It’s a relatively small survey - just 300 existing or future owners were spoken to last year by a polling firm on behalf of Foundation Home Loans - but 67 per cent would regard a mortgage rate based on a property’s Energy Performance rating as an appealing feature of a loan. 

The research also found 48 per cent of owners and prospective homeowners would consider work to improve a property’s EPC if that meant a more favourable mortgage rate.


George Gee, commercial director at Foundation Home Loans, says: “There’s no doubting we’re going to be seeing a much greater government focus on the UK’s housing stock, how its energy efficiency ratings can be improved, and how that might help the UK meet its carbon emission targets.

“To that end, there appears to be a far greater appreciation of energy efficiency within the home from individuals, and it’s positive to see two-thirds of all those polled saying a mortgage product with rates based on EPC ratings would be an appealing part of the overall product mix.”

In a separate development, domestic fuel bills are set to rise by at least 50 per cent when the new energy price cap comes into force in April, according to consumer guru Martin Lewis, the founder of the Money Saving Expert website. 

"What's coming in April is a seismic hit for fuel bills which is going to be astronomical. They [the government] have to sort this now because if we leave this before it's too late it will be a disaster.”

He adds: "We are going to see a minimum 50 per cent increase in energy prices in the system and that is unsustainable for many … We need to look at what we can do now and how we can protect those people who will need to choose between heating and eating.”

The government says protecting consumers is a top priority with initiatives such as the £500m household support fund, the warm home discount and the winter fuel and cold weather payments.

Domestic fuels such as gas and electricity are also already subject to the reduced VAT rate of five per cent.

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    • Mr P
    • 05 January 2022 08:30 AM

    The value of a house with a low EPC rating would be lower than one with a good EPC rating as it would most likely be an unmodernised house and priced to represent the cost of the work required to modernise it! Linking mortgage interest rates to EPC ratings is never going to happen and if it did then happy days as cash buyers would clean up!

  • Tom Tangney

    I agree with Mr P in part but Green Loans are available. In addition, investors are now looking at ESG ratings when looking to place their funds which mean lenders will look more closely at an EPC rating and may offer better terms accordingly.
    However, we are in a supply and demand business which has a big say in property values so it may take time for this to filter through as the EPC will need to be carried out prior to providing a market appraisal and who will pay for them.


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