UK homes: accelerating the transition

Never has it been more important for the built environment to play its part in the transition to a lower carbon environment, but many are still not considering making home improvements despite making other changes to lifestyle to help tackle climate change.

According to recent surveys conducted by the Office for National Statistics:

• While 81% of adults in the UK have made at least some changes to their lifestyle to help tackle climate change, retrofitting is further down the agenda with 75% of adults not yet considering making home improvements.
• This issue is exaggerated by house prices and the rising cost of living with retrofit cost and house ownership being two main barriers preventing action, notwithstanding 74% of adults believing that it would help towards tackling climate change.

Barclays’ Corporate Banking developer and house building clients report that energy efficiency is a high priority for consumers of their new build properties. This is driven predominantly by the rising cost of living but also because of increasing awareness and support for the climate agenda. Whilst this is a focus for new build consumers, the ONS data suggests that there remain significant cohorts of homeowners and occupiers who are not yet taking action, with 34% citing cost as a barrier to making improvements, notwithstanding that fewer than half of assessed homes in both England (42%) and Wales (37%) have an EPC rating of C or higher.

Barclays is spending time on the issue of retrofitting, recognising that homes account for around 15% of the UK’s greenhouse gas (GHG) emissions through their use of oil and gas for heating and hot water, and that the Government has identified improving the energy efficiency of the UK housing stock as a key vehicle to achieve net zero by 2050.

As part of a new initiative, Barclays has recently launched a Sustainable Residential Development Finance Framework to enable the classification and tracking of performance of green and sustainability-linked residential development loans to their Corporate Banking real estate clients. The aim of the framework is to ensure Barclays’ Corporate Banking clients are well equipped for the changing regulatory landscape and able to keep up with the consumer demand that is increasingly focused on energy performance and efficiency of homes. The framework signposts varying levels of green loan eligibility criteria – gateway, good, innovative or emerald and also recognizes the positive impact that developers can have in the communities in which they operate through social impact criteria. Through the framework Barclays is aiming to raise awareness that will help drive up a broader understanding of the issue and what needs to be done, with the framework also being applicable to large scale portfolio retrofits.

Lending has an important part to play in accelerating the transition but there are several other factors that must be addressed to encourage businesses to act. Barclays also observes that many consumers and clients understand the benefits of home energy efficiency and want to make a difference, however they would benefit from greater clarity on the most sustainable long-term choices. Barclays want to work collaboratively with others to raise awareness and create the right conditions for change.

Barclays has a broad range of lending products which may be available for homeowners, buy-to-let landlords, businesses, commercial real estate clients and social housing providers to enable them to spread the cost of required works. This includes the Green Home Mortgage for residential and buy-to-let customers for those purchasing energy efficient new build homes with an EPC A or B rating, sustainability linked loans for larger real estate and social housing clients (amongst others) and green term loan financing.

Amy Crick, Head of London, UK Real Estate, Barclays Corporate Banking