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Future proofing your home - is it worth it?

Journalist: Carmen Reichman, FTAdviser

ended 01. September 2023

Dear advisers

In your opinion, is climate future-proofing your home worth it, ie installing solar panels, heat pump, proper insulation etc?

What are your views on the cost vs reward in the current climate? 

How could you benefit from such upgrades when it comes to mortgage costs as both an owner-occupier and a landlord?

Looking for views for a potential story on FTAdviser as part of a mortgage hub we're running in September.

Thank you!

 

11 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
Whilst the intentions are good, the cost vs reward just isn't usually financially worth it. There are several grants and assistance schemes in place which people should look into however majority of people I speak to really aren't motivated to get on board with the initiatives. There are small wins that can be carried out such as insulation and lighting however the big ticket items such as the solar panels and heat source pumps are less advantageous.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The increased home value certainly will not be worth the investment in the green improvements. So it depends if you see the property as your forever home or just a stepping stone. The return on investment period is still well over 10 years on most improvements, and often much longer. Therefore unless you plan to live in the property long enough to realise the benefits this would not be worthwhile. That said, the reduction in monthly outgoings can certainly help households, and benefit the environment, so is greatly encouraged, but the initial cost outlay at the moment does not make it a priority for most households.
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Justin Moy
Managing Director at EHF Mortgages
In the current climate, for the majority of borrowers their focus and main priority will be to ensure the mortgage cost, and household bills, can be paid each month, and the value of such home improvements will be much lower on the priority list. The only way to accelerate this future-proofing will be through the use of grants and incentives that the government may make available, also Mortgage lenders will need to be consulted too, just to ensure we don't have the issues of sub-letting for solar panels, which does cause some difficulty when homeowners wish to sell their homes.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Let us look at my house as an example which has an EPC rating of D - As per the government EPC rating website, I could make a saving of £628/year on heating/water and lighting costs, by making the following changes - upgrade Wall Insulation, Floor Insulation, Solar Water Heating and add Solar Panels for electricity savings, with an average cost to install of £21,700 - with the savings of £628/year on energy bills, it would take me 34 years to break even - oh and my EPC rating stays at D.
This is an all too familiar story I'm afraid, up and down the country. Green Mortgages would still not be available for me, so no cost savings on these mortgages either. Until the government steps in with support schemes and grants to help consumers upgrade their homes, then I can't see too many people making upgrades to their properties anytime soon, even if they want to.
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Aaron Strutt
Product and Communications Director at Trinity Financial
Many homeowners would love to make their properties more energy-efficient, but at the moment they do not think the upgrades make much financial sense.

Banks and building societies offer green mortgages that provide marginally cheaper rates for homes with good EPC ratings. Over the coming years I suspect people will be forced to make changes to their homes so they are better for the environment. 

Halifax has teamed up with Octopus Energy to help its customers cut the cost of installing an air source heat pump and more schemes like this are likely to be available. However, many homeowners are more worried about making their repayments on time rather than paying for expensive upgrades.

Landlords in particular already have to meet strict EPC ratings with many lenders and if the upcoming government rules to make rental properties more energy efficient come in, many will not have the spare cash or the desire to make the changes.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
At the moment there is a very definite line in terms of energy savings for your home. There are a lot of low-cost and effective ways to improve the EPC rating of your home and potentially make it more appealing - LED lighting and the correct level of loft insulation, for example, are both easy and cost-effective. Then there is a big step up in terms of cost with things like new boilers, solar panels, double or triple glazing and heat pumps - there is certainly a long period before any savings these make pay for their installation costs, and that puts a lot of people off. Moving forward there will be pressure from the government as they try to hit net zero that could shift the dial on this; if having a good EPC means your mortgage is lower, or the house is easier to sell due to lower SDLT for energy-efficient homes, then the cost of these larger improvements may be seen as more worthwhile.
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Luke Loveridge
Founder and CEO at Eco Approach
In roughly 70% of UK properties the business case for future-proofing makes sense if you are an owner-occupier; the financial benefits outweigh the costs.

This is based on lifetime energy savings, but there are other benefits like mortgage incentives saving around £2.5k over 5 years, making your home more comfortable, increasing or defending its value, and being more self-sufficient so that energy price rises affect you less.

If you’re a landlord, it is a bit more complex if you can’t raise rents to cover energy savings. You can also claim tax relief on capital gains and some limited wear and tear allowance, and there will be savings on mortgages for retrofitting. Landlords will need to get to an energy rating of C by 2028 in any event.

We’ve spoken to lenders representing over 90% of the mortgage market this year, and many are preparing to offer more generous retrofit mortgages including blended rates with low or zero % loans used for making your home more energy efficient.
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Joe Garner
Founder & Managing Director at Joe Garner Consulting
I wholeheartedly advocate the idea of homeowners investing in home insulation and incorporating authentic energy upgrades like solar panels and energy-efficient heating systems.

This approach not only yields immediate benefits in terms of reduced energy bills but also serves as a prudent shield against the evolving minimum energy rating mandates that are already rolling out for commercial and rental properties. It's a forward-thinking strategy that ensures long-term sustainability while keeping energy costs in check.
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Christian Duncan
Managing Director at Manchester Mortgage Centre
Future-proofing your home sounds attractive until you look at the costs involved in installing solar panels, air heat pumps and battery storage - not to mention the additional space needed to house the equipment.

I don't believe it's beneficial for landlords to consider this with the ever-increasing interest rates. I do however believe if you're in your forever home looking to future-proof your property to become "green" and save money in the long run on energy prices is beneficial if you can stand the upfront costs.

Mortgage lenders are actively encouraging homeowners and landlord lords to increase the EPC rating of their property by offering cash-back incentives, lower interest rates and more attractive products.

Why...Lenders want to increase the quality of their property portfolio. It's the right thing to do but will also increase the value of their business's.
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Imran Khan
Co-founder & CEO at QuantumLoopAI
In the current landscape, it's an arduous reality for landlords. With the sword of Damocles in the form of rising interest rates, stricter legislation, and increased taxation hanging over them, the idea of spending more on climate future-proofing seems utterly counterintuitive. The upcoming proposed EPC regulations requiring a minimum rating of 'C' by 2028 will already be stretching budgets thin. The truth is, landlords are battling to keep their heads above water, and investing in green upgrades offers no tangible returns. Rent prices don't inflate because your property has solar panels or superior insulation. Moreover, most tenants don't set such criteria as prerequisites for renting. It's a case of landlord pragmatism vs environmental idealism, and right now, survival instincts take precedence.
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Adam Wells
Mortgage Advisor / Director at Lloyd Wells Mortgages
It's all about finding a balance when it comes to going green. We all need to do our part, but we also don't want to spend a ton of money on something that might not make a big difference in the long run. Solar panels and heat pumps are great options, but they can be expensive. And who knows, the technology might be obsolete in a few years.

I just moved into a new house and got a mortgage with Coventry BS. They're currently offering a lower interest rate on further advances if 50% of the loan is used for energy efficiency improvements. That's a great deal, and I'd definitely consider going with greener options if it meant saving money on my mortgage.