Homebuyers may soon be asked to improve the insulation of their properties as part of their mortgage requirements under plans announced by the government.
The Guardian reports that mortgage lenders will be asked to disclose the energy efficiency performance of properties in their portfolio, which has ignited concerns that it may deter banks from offering mortgages to people hoping to buy cheaper, less efficient homes.
Leader of the Lib Dems, Sir Ed Davey, was one of the first to urge the government to scrap the plan, saying: “This is an insult to first-time buyers who have scraped and saved to get on the housing ladder."
He added that the Conservatives need to ‘cancel this plan immediately’, and that ministers are ‘attempting to clean up their own mess’ by making first-time buyers hand over thousands of pounds more, just before a hike in interest rates.
UK Finance, the body that represents mortgages lenders, has warned the government that the proposals could lead to a ‘two-tier market’ by pushing some homeowners into negative equity if they cannot afford insulation improvements.
“New and newer-build properties are likely to have better energy performance – it could be much more difficult to bring older properties up to standard in a cost-effective way,” the group stated.
UK Finance also warned against the unintended consequences that might trap owners in poorer performing properties or create a two-tier market, where borrowers end up paying more, but with far less choice.
Downing Street officials have denied that the plans to boost energy efficiency would punish first time buyers, and said that the scheme aimed to ‘to catalyse the development of the green finance market’.
“We would only introduce a policy which was guided by fairness for the public,” Boris Johnson’s official spokesperson said.
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