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Valuing energy performance in home purchasing: an analysis of mortgage lending for sustainable buildings

Hamilton, I; Huebner, G; Griffiths, R; (2016) Valuing energy performance in home purchasing: an analysis of mortgage lending for sustainable buildings. Procedia Engineering , 145 pp. 319-326. 10.1016/j.proeng.2016.04.080. Green open access

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Many UK lenders consider energy costs, but only as it relates to information about the customers and not the energy performance of the building. Lenders could include more detailed energy costs estimates that reflect energy performance alongside other ma jor household expenses when assessing customer affordability. At present, energy performance ratings required for all homes sold in the UK are of dubious quality and generally do not accurately reflect the likely energy costs. However, if lenders were to inc lude energy performance in their mortgage calculations this might ha ve the effect of improving the accuracy of energy performance ratings through market pressure. It may also have the consequence of increasing the value of more efficient homes, which would have lower energy costs and improve its affordability for customer s. It may also offer an opportunity for lenders to extend mortgages to improve the dwellings energy performance due to the potential increase in value. In this work, we set out the implications of mortgage lenders using the dwelling’s energy perfo rmance as part of their energy cost calculations. We also illustrate how improving the accuracy of ratings can achieve more precise estimates of energy costs. The implication of includ ing energy performance ratings when providing mortgages could result in £billions for lenders in terms of loan extensions and more accurately property values. It could also help potential purchasers understand the real costs of the properties they purchase.

Type: Article
Title: Valuing energy performance in home purchasing: an analysis of mortgage lending for sustainable buildings
Location: Arizona State Univ, Coll Avenue Commons, Tempe, AZ
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.proeng.2016.04.080
Publisher version: http://dx.doi.org/10.1016/j.proeng.2016.04.080
Language: English
Additional information: © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/ ). Peer-review under responsibility of the organizing committee of ICSDEC 2016
Keywords: Science & Technology, Technology, Construction & Building Technology, Engineering, Civil, Engineering, Mortgages, Lending, Fuel Bills, Energy Performance Certificates, Uk, Consumption, Gap, Vs.
URI: http://discovery.ucl.ac.uk/id/eprint/1505604
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