With fossil fuels a limited resource, global energy prices are expected to continue to rise.  Despite the relatively stable price of domestic gas and electricity over the past five years there is an upward pressure on household energy bills. Together with pledges to reduce greenhouse gas emissions, we will over time see a greater demand for greener homes.

In assessing affordability lenders calculate borrowers’ fuel costs using data based on historic household income which does not take any consideration of a property’s energy efficiency.  A group of organisations have launched the LENDERS project which aims to demonstrate that more accurate fuel cost estimates can be used by lenders, thereby allowing them to grant larger mortgages to lower energy homes.

Any initiative which encourages more efficient and greener homes should be welcomed; households benefit from lower energy bills and it’s a more sustainable option going forward.   This project will of course have many hurdles along the way and there will be wider impacts to consider.  For example, if the maximum borrowing amount varies depending on a property’s energy efficiency, how will this affect the buying process?  Will lenders even choose to offer larger mortgages for lower energy homes?  The long term goal to stimulate demand, in turn driving an increase in the values of greener homes and in the number being built is ambitious, but admirable.  Notwithstanding consumer behaviour, industry and government will need to work together if this is to be achievable.