Lenders should adjust affordability criteria for buyers of new homes
The housebuilding industry is calling on lenders to offer mortgages at more favourable rates for those buying new homes where energy bills are less than half that of existing properties.
The Home Builders Federation Watt a Save report reveals owners of new homes will save an average of £135 on running costs under Ofgem’s new price cap.
HBF managing director Neil Jefferson said: “As mortgage affordability gets tougher, rental costs increase and the country’s need for homes grows increasingly desperate, lenders and government must review affordability assessments in consideration of these numbers to support more people to get onto the housing ladder.”
The average energy bill savings increase to 64% when comparing new houses with older properties, offering average monthly running cost savings of £183.
However, most mortgage affordability assessments are based on the same energy bill assumptions with lenders applying the same assumed monthly expenditure. The HBF has pointed out that energy performance certificates, EPCs, offer an indication of household running costs.
“This is a missed opportunity to offer improved mortgage deals that incentivise environmentally conscious and long-term money-saving buying decisions, which would also support the next generation to realise their homeownership ambitions,” said Mr Jefferson.
New homes are already delivering green benefits
The HBF’s report found 85% of new builds were awarded an A or B, EPCs, versus just 4% of older properties. The analysis of government data also shows new homes use 55% less energy and 60% less carbon than older counterparts.
“The findings illustrate the benefits of modern building practices, technology and products, and industry’s commitment to greener, environmentally conscious construction,” added Mr Jefferson.
Brokers Hank Zarihs Associates said development finance lenders were behind making it easier for new homes to be purchased by considering their lower running costs.
Watt a Save has estimated that new homes constructed from 15 June 2022 under part L building regulations will emit 71% less carbon than the average older property. In 2025 future homes standards will be mandatory requiring new homes produce 75 to 80% less emissions.
