Halifax will be using a property’s Energy Performance Certificate (EPC) rating in its affordability calculations from tomorrow and brokers reckon it’s both a ‘game changer’ and ‘big move’.
The lender says that the move aims to better account for energy costs and reflect the financial advantages of energy-efficient homes.
The change means that borrowers purchasing properties with higher EPC ratings – such as ‘A’ or ‘B’ – may see a slight increase in their maximum loan amount.
LOWER ENERGY EFFICIENCY RATINGS
And properties with lower energy efficiency ratings, such as ‘F’ or ‘G’, may face a minor reduction in loan limits.
For homes with EPC ratings of ‘C’, ‘D’, or ‘E’ – or where no rating is available – affordability calculations will remain unchanged.
REALLY EXCITED
Amanda Bryden, Head of Halifax Intermediaries, says: “This is something I’m really excited to see roll-out!
“At Halifax, we’re now factoring in property energy efficiency, to better reflect likely annual energy costs, when looking at how much customers can borrow.
“Our data analysis shows that customers who have a more energy efficient property, with an EPC rating of A or B, usually have lower bills. Therefore, we’ll be able to lend more to them than if they were buying a property with a lower rating.”
And she adds: “This change is an opportunity for us to more accurately calculate affordability, as well as helping consumers to understand the energy efficiency of their homes, and the homes they’re hoping to buy.”
Brokers told Newspage what they thought of Halifax’s new position.
GAME-CHANGER
Iain Swatton, Director at Exemplar Financial Services: “Halifax’s move to factor EPC ratings into affordability calculations is a game-changer, encouraging homeowners to improve energy efficiency while making properties more appealing to buyers and more affordable to own.
“By linking living costs to energy performance, Halifax is leading the way in nudging consumers toward greener choices.
“With some lenders already pricing mortgages based on EPC ratings, this progressive step could spark industry-wide competition, driving innovation and affordability. A unified approach across the sector would maximise benefits for consumers, the property market, and the environment alike.”
A BIG MOVE
Aaron Strutt, Product and Communications Director at Trinity Financial: “Banks and building societies have been using discounted mortgage rates or cash back to incentivise people to make energy efficiency rating improvements, so adjusting the amount applicants can borrow based on the EPC rating is new.
“The previous government put many lenders under pressure to do more to ensure our housing stock is more energy efficient and they have been working out what to do.
“This is a big move from Halifax that other lenders may well follow. It will cost an absolute fortune to make many properties more energy efficient but there are more options to help secure funding to carry out work.
“Adjusting the mortgage loan size is a new ploy that will force many borrowers to improve their property. Some lenders already insist homes have an A or B rating to access the cheapest deals, but they don’t reduce the amount they can borrow.”
GOOD INITIATIVE
Ben Perks, Managing Director at Orchard Financial Advisers: “Evidence shows that the energy efficiency of a home isn’t the key to lower bills. It’s lifestyle.
“My wife could live in the most energy efficient home in the UK and we’d still have high bills because she likes to live in a furnace.
“A good initiative, but not a true indication of living expenses and savvy people in less energy-efficient housing could lose out.”
GREAT OPPORTUNITY
Justin Moy, Managing Director at EHF Mortgages: “This is an excellent way to reward those who make significant improvements to their home.
“Lower bills equals a higher mortgage, and those with inefficient homes will be penalised.
“It’s early days but a great opportunity for Halifax to lead the market with this initiative.”
NEGATIVE IMPACT
Simon Bridgland, Director at Release Freedom: “It’s a great idea in principle, however I would be concerned that it could have a negative impact on borrowers without any choice or affordability to enhance the epc score on their homes, meaning some will undoubtedly be excluded from the Halifax gang.
“If the government also change the measures for epc scoring following the current consultation, then it could be compounded against less affluent borrowers.”
LAYER OF COMPLEXITY
Michelle Lawson, Director at Lawson Financial: “This is a good bit of innovation from Halifax.
“However it risks adding another layer of complexity.
“I’m not sure the rest of the lending community will follow due to the costs of bringing this into place.”
