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Halifax to use a property’s EPC rating in its affordability calcs: "This is a big move from the Halifax"

ended 06. December 2024

Halifax has today announced that, from Tuesday 10 December, it will be using a property’s Energy Performance Certificate (EPC) rating in its affordability calculations, which brokers have said is a "game changer" and "a big move".

It says: “We are now able to better reflect the impact of home energy costs, and some of the financial benefits of more energy efficient homes. We continue to support customers looking to improve the energy efficiency of their properties, with our Green Living Reward cashback proposition and our partnerships with heat pump, solar panel & insulation installers.”

The lender adds that: “Within our affordability model, assumed ‘cost of living’ values are already incorporated, which include energy costs. This adjustment reflects a more tailored view of these costs. A customer whose property has a higher EPC rating (e.g. A/B) will generally have lower energy costs than those with a lower EPC rating (F/G) on like-for-like use. For properties with an A/B EPC rating (c.15%) you may see a small increase in the maximum loan amount available and for properties with an F/G EPC rating (c.3%), a small decrease. There is no change to the maximum loan available for properties with a C, D or E EPC rating or where the EPC is unknown.”

 Newspage asked brokers for their thoughts, below.

6 responses from the Newspage community

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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.
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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.
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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.
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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.
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Michelle Lawson
Director at Lawson Financial
This is a good bit of innovation from Halifax but it risks adding another layer of complexity to the whole process. I'm not sure the rest of the lending community will follow due to the costs of bringing this into place.
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Simon Bridgland
Broker at Charwin Private Clients
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.