The Equity Release Council has published guidance for lenders and advisers to consider on retrofit lifetime mortgages.
In consultation with the Green Finance Institute and council members, the guidance is designed to support product development and act as a starting point for discussion within the industry as providers seek to adapt to changing demand.
Equity Release Council head of risk, policy, and compliance, Kelly Melville-Kelly, said: “As the representative trade body for the equity release market, we want to champion its potential and ensure that it continues to meet the needs of as many customers as possible.
“We hope that the guidance we’ve outlined can help to accelerate efforts to innovate in the later life mortgage market and deliver a decarbonised housing market which future generations will benefit from.
“It is essential that we all play our part to reduce the carbon footprint of our homes and retrofit the UK’s ageing housing stock.”
Melville-Kelly added that, as well as reducing carbon emissions, using equity release to make green home improvements can also lower customers energy bills, future-proof their home and even add value.
“Within the guidance we have also outlined an example of best practice for the industry and a proposed customer journey, to ensure that the necessary expertise and advice is given to customers throughout the process,” she concluded.
Demand
The council added the guidance was created in response to an ageing housing stock and ambitious net zero targets and hopes it will “move the conversation on green home finance forward”.
It explained the rising demand for more energy efficient presents a “significant” growth opportunity for the equity release market.
A tailored retrofit lifetime mortgage proposition, supported by advice, can support a new customer demographic who previously may not have considered equity release.
This approach enables advisers to "engage with a broader pool of customers" and encourages lenders to "develop products with attractive and unique selling points".
As well as defining good practice, ensuring protection for customers and providing guidance for advisers, the guide also outlines what brokers and lenders may need to consider to ensure any new products deliver meaningful carbon emission reductions.
Green Finance Institute associate director for built environment, Rachel Hunnisett, added: “The ERC has a proven track record of setting high standards which lead the market, protect consumers, and give a voice to the sector it represents.
“We have worked closely with the council to develop their retrofitting standards, closely mirroring the GFI’s Green Home Finance Principles which provide integrity to the green home finance market.
“By working together, we ensure consistency across the market and a focus on driving private capital towards solving the UK’s £250bn funding gap for improving the energy efficiency of homes.”
tom.dunstan@ft.com
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