Eon and BNP Paribas Personal Finance UK have today (17 October) announced a new collaboration to bring “green mortgages” one step closer to the UK property market.
The partnership will provide an “affordable source of finance” to make energy efficiency makeovers more accessible to millions of people.
Eon said tackling energy efficiency levels of existing housing stock is one of the “biggest infrastructure challenges” of this generation.
The government’s Clean Growth Strategy aims by 2035 to bring as many homes as possible up to an energy performance certificate (EPC) band C level where practical, cost-effective and affordable.
Around 19 million UK households equal to around 71 per cent of the UK’s 27 million homes – currently fall below an EPC band C rating.
Under the umbrella of the Energy Efficient Mortgage Action Plan (EeMAP) initiative, Eon is working with BNP Paribas Personal Finance to develop and pilot an a “green mortgage” product, which will allow movers, first time buyers, and re-mortgagers to use their mortgage to borrow further via a linked “energy efficiency home improvement loan” to improve the energy efficiency of their homes.
BNP Paribas Personal Finance would provide the improvement loan financing and Eon would provide a managed service to install appropriate energy efficiency solutions under this model.
The improvements funded through the scheme loan could also result in a discounted mortgage rate once the energy efficiency measures have been verified via an updated EPC.
Michael Lewis, chief executive, Eon UK, said: “We need to find ways to radically increase interest and action on energy efficiency in homes, but property owners often face a significant financing barrier when wishing to do so.
“In the UK, attempts have been made in the past to tackle this barrier through schemes like the green deal, but they have not been successful, in part because they weren’t designed with the customer front and centre.”
He added: “Green mortgages have the potential to be a game changer in the delivery of affordable finance and we are ready to meet the challenge for home-owners motivated to take the step into energy efficient living.
“Our agreement with BNP Paribas Personal Finance is a further step along this journey and brings together two well-known international companies with expertise in financing and delivering energy saving solutions across Europe.”
Eon said the move should provide an added incentive for customers to better insulate buildings, replace old heating systems or increase their energy independence through solar panels, batteries or virtual storage.
The aim of this pilot scheme is to provide a competitively priced home improvement loan provided by BNP Paribas Personal Finance linked to a mortgage to fund a range of personalised energy efficiency solution bundles delivered by Eon.
These could include measures such as insulation, energy efficient boilers and smart meters and smart thermostats.
Other smart energy technologies such as electric vehicle charging points, solar panels and battery storage, as well as heat pumps could also be funded as part of the scheme.
Claire Perry, minister for energy and clean growth, said: “The UK has led the world in cutting emissions whilst growing our economy – with clean growth driving incredible innovation and creating hundreds of thousands of high-quality jobs. Ten years on from the Climate Change Act, the first ever Green GB week is a time to build on our successes and explain the huge opportunities for business and young people of a cleaner economy.
“I’m delighted to see how many more businesses and organisations such as Eon and BNP Paribas Personal Finance are seizing this multi-billion pound opportunity to energise their communities to tackle the very serious threat of climate change.”
Eon and BNP Paribas Personal Finance are working towards further collaborations with building societies and finance providers to pilot and develop the financing solution to customers, initially for the UK market, in the first half of 2019.