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Decarbonising the Nation’s Housing: The Role of Lenders

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Building Societies Association

5 min read Partner content

There is no route to net zero that does not address the energy efficiency of the nation’s homes, and mortgage lenders have a critical role to play. The House sat down with Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association, to learn more about the steps that UK mortgage lenders are taking to support the nation’s net zero commitment.

As we transition to net zero, there is a long list of challenges we face as a nation. These range from the way we generate electricity to how we transport ourselves.

However, perhaps the biggest challenge of all relates to residential property. How do we upgrade the condition of the nation’s housing stock to reduce the negative impact that it currently has on the wider climate?

Getting this right would be a major step forward on our journey to a greener future. UK homes are responsible for 25% of total energy usage and 16% of UK Greenhouse Gas emissions. Quite simply, there is no route to net zero that does not deal with UK housing.

The sheer scale of the work and investment needed, however, can feel dizzying.

“The challenge itself is absolutely huge, and it gets more urgent every day that passes,” Broadhead explains. “It cannot be a piecemeal approach. 29 million homes need retrofitting. That's a million homes per year. That's over 2,700 homes per day if we are to hit the 2050 net zero target. Every day we fail to act puts that number up and makes it ever more challenging.”

Our conversation feels particularly timely. On the day we meet, every headline and news report is leading on the impact of the rising cost of energy on people’s lives. It is clear that the energy efficiency of UK homes is at the forefront of the minds of politicians and public alike.

This heightened public awareness is a strong starting point for change, but Broadhead is clear it is only one element of the solution. He also identifies a pressing need leadership from politicians, a consistent approach, and an overarching strategy that recognises the skills and knowledge that different partners bring to the table.

“We need a plan,” he says, quite simply.

That plan, he explains, must focus on translating growing consumer demand into practical, proven, and trusted actions that improve energy efficiency.

“Our members are increasingly seeing people wanting to do something,” he tells The House, “but that isn't really converting into meaningful action at scale. We have the perfect storm now with the energy crisis. Anything that people can do to save money they will.”

Broadhead points to recent polling showing that three quarters of consumers would like to increase the energy efficiency of their homes. The challenge now for government and the wider housing industry is how to convert that increased homeowner awareness into action.

This is the key problem that everyone with a role in decarbonising housing needs to address. It is the reason that Broadhead is crystal clear on the need for a plan, a roadmap that can guide UK homeowners through the maze of different energy efficiency options to deliver improvements that save them money and benefit the wider environment.

As someone who has worked in the sector for a while, Broadhead also believes that there is useful learning from previous attempts to create new markets in energy efficiency. We touch on the Green Deal, scrapped in 2015, as an initiative that did not get the traction that it needed to make an impact.

If we get it right, we are going to be living in cleaner and safer communities

He warns that avoiding the same mistakes is critical if we are to hit the nation’s 2050 target around net zero.

“Previous false starts have been down to a lack of awareness, a lack of demand, and a lack of desire from households to improve their homes from an energy efficiency point of view at scale,” he explains. “We simply cannot afford to get it wrong again.”

When asked how we can avoid similar missteps as we move forward, Broadhead sees a pivotal role for government in providing the leadership that will unlock the skills and capacity within the housing sector.

Key to this will be providing the certainty and consistency essential for building consumer trust. By way of example, Broadhead points to how a current lack of clarity from government around a future switchover to hydrogen is making it difficult for today’s consumers to make decisions on everyday issues like choosing a new boiler.    

But Broadhead is clear that consumer confidence on issues like this will only emerge if there is certainty provided by political leaders. 

“Once Government has announced how they will support people to improve their homes, they need to stick to it,” he tells us. “This needs to be a long term plan because we've seen before that if government dips a toe in the water, and then takes it out, then people lose faith.”

Not only would this create certainty for consumers, but it would also provide certainty for businesses wanting to step forward to play a fuller role. This would create a foundation for industry led solutions to emerge, ultimately growing a new market in retrofit that is understood and trusted by UK households.

The early signs are that such solutions are already beginning to emerge.

Broadhead gives examples of current collaboration in the sector, such as the production of a lender's handbook on green home retrofit technologies led by the Green Finance Institute. This work brought together charities, research bodies, lenders, and many others to develop what Broadhead refers to as “a single version of the truth” around the most effective products and solutions for householders.

Rolling out that “single version of the truth” to brokers, local government, and ultimately consumers will be the next stage of the journey. However, Broadhead cautions that achieving this requires a clear strategy from government that unlocks industry expertise and resources.

Such a strategy, he claims, would be transformational.

“If we get it right, we are going to be living in cleaner and safer communities,” he says. “It will be healthier for people healthier for their pockets and healthier for their communities. It will impact on people's lives on a daily basis for the better.”

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