First-time buyers borrowing with Help to Buy top up mortgages in Wales will be eligible for a larger loan if they purchase a more energy efficient home.
Wales will become the first country in the UK to roll out the initiative which assesses home loans on the energy rating of a property.
It works on the basis that people may be offered a larger loan because their energy bills will be smaller. And it could lead to the maximum lending amounts varying between the most and least energy efficient homes by as much as £11,500.
The change, being implemented in June, is expected to help many people on to the property ladder who might otherwise have struggled to secure a mortgage.
Rebecca Evans, Wales minister for housing and regeneration, said: “We know that energy spending can be a major household outgoing, which is why we want to make energy efficiency part of the consideration when people look to buy a home in Wales.
“We hope to see lenders follow our lead and making energy efficiency part of the mortgage consideration for all homebuyers in Wales.”
The change to Welsh Help to Buy top up loans is being implemented following research by the LENDERS partnership, which was part funded by Innovate UK and involved a consortium of industry experts.
Along with the Building Research Establishment (BRE), it set out to prove that having a better idea of likely household energy costs could improve mortgage affordability assessments and this could help borrowers access a larger home loan.
Their investigations demonstrated the link between energy efficiency and household fuel bills. And it also created a calculator to help predict household fuel bills and how they will be affected by the energy performance of a home.
Now the Welsh Government is putting the research into action, with the loans being administered by the Development Bank of Wales.
Andrew Sutton, associate director or BRE Wales, said: “This announcement is a great step for the LENDERS project outcomes and fantastic news for first-time buyers in Wales.
“The more accurate forecasting provided by the research will help many onto the housing ladder who might have struggled to obtain a mortgage previously, and the research we will do in parallel with the adoption should help other financial institutions better understand the practicality of implementing.”
