Can Your Client use Equity Release to Make an Energy Efficient Home?

Brendan Gilligan , Head of Products and Insight

Published on 26th October 2022

Energy Efficiency and Equity Release: Joining The Dots At A Critical Time

Over the past year or so the news headlines have been dominated by the cost of living crisis, meaning inflation has risen to levels not seen in the UK since the 1980s and government figures showing that 66% of British adults said their cost of living had increased this year, with 79% citing higher electricity bills as a cause.

Energy Performance Certificates

Naturally as winter approaches, consumers will be giving greater thought on how to make their homes more energy efficient, and discussion around energy performance certificates (EPCs) is growing. An EPC is a document which rates of property's energy efficiency on a scale of A-G. Analysing each element of the home including walls, windows, heating and lighting, the report will recommend cost-effective improvements the homeowner can make, ranging from swapping out your old lightbulbs, right up to the more costly changes, such as the installation of solar panel or improved all insulation.

You can find out if a property has a current Energy Performance Certificate on the UK Government website here.

Energy efficiency ratings in the current UK housing stock are mixed and vary depending on property type. Data from the ONS shows that almost 61% of homes in England and Wales had an EPC rating of D or lower in 2021. Additionally, data from Buy Association shows that 84% of new build properties were given an EPC rating of A or B in 2021 (compared to just 4% of older properties).

EPCs and Equity Release

Tools and resources to help homeowners understand their property's energy efficiency rating such as EPCs may be crucial at a time when energy bills are a significant concern among consumers. A higher EPC rating can also improve the value of your client's property significantly, as evidenced by a Dataloft survey which highlighted that homes sold with an EPC rating of A or B in recent years achieved a 10% price premium compared to homes with a rating of D.

Some of the biggest and most impactful means of improving a property's energy efficiency can be achieved through, for example, the installation of double or triple glazed windows, or by installing condensing boilers. Measures like these are costly, but it's worth noting that 26% of consumers used equity release to fund home improvement, making it the most frequent use of funds among homeowners in 2021, according to a new report by Legal & General and the Centre for Economics and Business Research. With some energy-saving measures, such as new windows or insulation, often costing thousands of pounds, equity release could grant many retirees the funds needed to make such home improvements which were previously too expensive.

Pure Retirement's Free EPC Offer

To help inform our customers, Pure Retirement now offers a free EPC report to all new Classic lifetime mortgage customers upon completion of their loans. If your client opts in our partner, Vibrant Energy Matters, will conduct a free, thorough energy evaluation of their home, identifying its current rating and suggesting areas to improve it. With many consumers often being conscious of the need to enhance the energy efficiency of their home, but unsure where to start, it helps to illustrate not only the key areas of improvements but also the likely costs and long-term savings. As a result, it helps lifetime mortgage customers to focus expenditure on the areas they'll see the greatest benefit from and help them to make informed decision.

If you would like more information about Energy Performance Certificates and our current initiative on our Classic range, visit our dedicated EPC webpage.

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