Greening Homes – Unlocking demand for green home finance
As the UK awaits the government’s forthcoming Warm Homes Plan, UK Finance’s new report highlights how the financial services sector can help unlock demand for green home improvements and play a key role in decarbonising the country’s housing stock.
With the UK government’s Warm Homes Plan due for publication later this year, UK Finance released our report, “Greening Homes, Creating Growth: Unlocking demand for green home finance”, at the start of June.
Why does the financial services sector care about making the UK housing stock greener? Lending can play an important role in helping customers pay for green home improvements, including energy efficiency and cleaner heating sources. Many banks and building societies have built up years of experience supporting homeowners to finance such retrofits, but uptake remains low.
How can the financial services sector encourage consumers to make green home improvements when demand is sparse? What is the role for lenders in this, particularly when only 3% of respondents to a recent UK Finance / YouGov survey said they would trust their bank for advice and guidance on heat pumps?
We recommend that government lead the way by providing policy incentives to unlock the demand.
Our report sets out nine recommendations for the Government to inspire action, improve the pay-back and redefine standards for homeowners to make green improvements to their properties.
This includes setting up a public information campaign, led by the government, to build trust in green technology and reduce misinformation.
Cost remains a key barrier for consumers when looking at installing heat pumps in their homes. Grants and subsidies should continue and be enhanced. Potential cost savings should be highlighted to the consumer and be easy to understand.
A plan needs to be in place to train sufficient tradespeople for green home improvements to ensure when demand grows it can be met, otherwise consumers will look to those less green technologies where there are ample tradespeople to install and provide maintenance.
Our research also showed that more needs to be done to encourage consumers to make green improvements to their homes. We found that public understanding of green home improvements remains low; with just 18% of respondents strongly agreeing they have enough information on whether a heat pump would be suitable for their home.
It is only with a fuller information campaign, combined with trusted advice for homeowners, that the UK can unlock the green homes opportunity and create new jobs up and down the country.
UK Finance is the voice of the banking and finance sector in the UK. Representing 300 firms, we’re a centre of trust, expertise and collaboration at the heart of financial services — championing a thriving sector and building a better society.
