First-time buyers in Wales who purchase an energy-efficient new-build property via the Help to Buy equity loan scheme may soon be able to get larger mortgages.
From June, the providers of all Help-To-Buy mortgages in Wales will take account of anticipated energy bills when calculating a loan.
Help-To-Buy top-up loans taking into account energy efficiency will be available from June almost exclusively on new-build properties up to the value of £300,000. As these properties are usually more energy efficient, this could open up access to the housing ladder for many. The primary loan will still be assessed under traditional criteria, while the top-up Help to Buy part of the loan, which is up to a maximum of £60,000, will include an assessment of the property’s energy rating.
The idea behind the new scheme is that if first-time buyers pick a highly energy-efficient home, they will pay less for their household bills and will therefore have more cash spare to pay off their Help to Buy loan.
This move follows research by the LENDERS partnership published in July last year of 40,000 sets of property data. Part-funded by Innovate UK and involving a consortium of industry experts and conceived and managed by the Building Research Establishment (BRE), the LENDERS project showed that better analysis of the likely household energy costs could improve mortgage affordability assessments.
Commenting on this extra support for first-time buyers in Wales, Rebecca Evans, Wales minister for housing and regeneration, says: “We know that energy spending can be a major household outgoing, which is why we want to make energy efficiency part of the consideration when people look to buy a home in Wales.
“We hope to see lenders follow our lead and making energy efficiency part of the mortgage consideration for all homebuyers in Wales.”
The LENDERS research has modelled the link between energy efficiency and household fuel bills and created a new consumer calculator (Epcmortgage.org.uk) to showcase the cost benefits of purchasing an energy-efficient property.
According to the calculator, the running costs of a three-bedroom house with an energy performance certificate (EPC) rating of E range between £125 and £170 a month while a Band A house, also with three bedrooms, could cost just £40 to £54 a month.
Researchers suggest that buyers could get an increased mortgage offer of around £4,000 for switching, say, from an E to C rating, where all other lending factors are the same. However, this will depend on an individual’s circumstances including income, the property value and how much they have borrowed from their main mortgage provider.
Again, if all other lending factors are the same, if a buyer were to buy a house that had an A-rated EPC, they could borrow £11,500 more than if the property were G-rated, according to LENDERS research.