The POWER project is supported by the Green Home Finance Accelerator fund (GHFA), a government initiative that aims to drive green finance innovation. It encouraged consortium applications, supporting industry wide collaboration to increase the implementation of energy efficient home improvements to support the UK’s transition to Net Zero.
Supporting green home retrofits
Virgin Money, together with Sero and Rightmove have developed the green retrofit mortgage, an innovative product designed to help owner-occupiers and landlords unlock the energy efficiency potential of their property through implementing green retrofit measures within existing housing stock.
This mortgage seeks to remove some of the cost barriers of retrofitting, offering affordable financing through a cashback incentive to support property owners in making energy-efficient improvements. Each green retrofit mortgage includes a Pathway to Zero, powered by Sero. This Pathway provides a tailored plan for suitable energy-efficient improvements to the property on an individual basis. It outlines estimated installation costs, expected energy cost savings and the steps needed to achieve Net Zero carbon emissions. The Pathways will also highlight the potential increase in property value, often referred to as a “green premium” supported by Rightmove’s groundbreaking new forecasting tool.
What is Virgin Money’s role?
High street lender Virgin Money aim to pilot an innovative green retrofit mortgage product focused on facilitating the implementation of energy efficiency measures within residential properties. The product will provide borrowers with a substantial cashback offer to fund the upfront cost of installing preidentified energy efficiency retrofit measures within their home. Virgin Money customers will also be provided with guidance and support powered by project partners Sero to enable them to confidently implement the appropriate measures within their home as well as the option to procure the works through a trusted 3rd party installer.
What is Sero’s role?
Property decarbonisation experts Sero undertook a desktop analysis of properties within Virgin Money’s back book, modelling their energy efficiency and building a greater understanding of the current transitional risks within the portfolio. Utilising readily available property data in conjunction with Sero’s digital forecasting tools, well informed assumptions on the properties and their energy efficiency formed assumed decarbonisation journeys.
In addition to assumed decarbonisation Pathways, Sero will provide applicants of Virgin Money’s green lending products with a detailed and bespoke Pathway to Zero aligned with PAS2035. The Pathway will take into consideration the uniqueness of the property in respect of its current condition to clearly outline appropriate retrofit improvements and the order in which they should be undertaken (referred to as Steps). The Pathway will provide the customer with a long term itemised retrofit plan to reach Net Zero as is required by UK government by 2050.
What is Rightmove’s role?
As the UKs number 1 property portal and market leading property data services provider, Rightmove will utilise their vast property dataset to track consumer behaviours in relation to energy efficient property searches. Through utilisation of features such as key word search on their portals, market trends and consumer appetite for energy efficient homes this data can be analysed and acted upon by the collaboration to further enhance the proposition.
Rightmove will also be developing and refining their green premium calculator, reflecting the benefits of undertaking energy efficiency retrofit measures on a home’s forecasted resale value. This green premium (a term used to reflect the value uplift of undertaking energy efficiency improving retrofit works) can then be utilised by consumers to understand the full impact of undertaking the suggested improvements outlined within their Pathway to Zero.
The POWER family
Find out more about the POWER project partnership here
Timeline:
- Discovery Phase start date: 11th of April 2023
- Discovery Phase end date: 31st of October 2023
- Pilot Phase start date: 18th of December 2023
- Pilot Phase end date: 28th of February 2025
Events
Mortgage Adviser Event (MAE) – 24th of May 2023, Tobacco Dock, London
The POWER team exhibited at the 2023 Mortgage Adviser Event where the collaboration engaged directly with mortgage brokers to discuss their experience of green mortgages, and the attitudes they were observing within their customer interactions.