Financing your sustainable development project is an issue which, over recent times, has been addressed by certain lenders. Wherever you live you’ll have noticed that the amount of green space surrounding the area in which you live seems to recede with each passing year as more and more housing developments are going up. And, it’s houses, and the way they are constructed and run, which accounts for a huge amount of damage when it comes to CO2 omissions.
Whilst we’ve all been encouraged to help to reduce our ‘environmental footprint’ over the last few years with the introduction of energy savings devices and recycling initiatives etc, there are many people who have realised that the measures we are taking are simply a drop in the ocean in relation to the problems the planet faces and that any steps they are taking only really pay lip service to the problems we are creating within our own environment. This has resulted in a noticeable increase in the numbers of people who want to go much further in their efforts to protect the environment and the desire to live in a more sustainable manner is growing.
Like purchasing any other home, financing a sustainable development project is going to require a mortgage. As yet, most of the major lenders have shied away from specialising in assisting specifically eco-friendly initiatives as they have yet to see hard financial evidence of there being a great source of revenue to them. However, a couple of well known high street lenders have taken up the challenge and, no doubt, many others will follow as the drive for saving the planet continues to gather momentum.
Bank and Building Society Initiatives
A couple of the UK’s high street banks have obviously stood up and paid attention to the growing importance that we, as consumers, are placing on being environmentally friendly.
The Norwich & Peterborough Building Society, for example, has introduced a new ‘green mortgage’. These are available to new homes with an SAP (Standard Assessment Procedure) rating of 80 or higher with regards to a property which you want to make more energy efficient. They are committed to planting 8 new trees for the first 5 years of the mortgage term which will, in effect, make the house ‘carbon neutral’ by offsetting the emissions from the property against the rate of carbon absorption by the trees. To do this, they have got together to plant the trees with Future Forest and they hope to be able to create two new forests in Lincolnshire and East Anglia as a result of their endeavours. At the end of the first 5 years, those customers who sign up to the green mortgage can continue planting more trees by paying future Future Forests directly and, at present, it costs around only £4 for each new tree which is planted.
The Co-operative Bank is also involved in a similar initiative. When a mortgage is taken out, it will pay for the first £200 of the customer’s legal costs and will also pay for the valuation. As part of that, the customer gets a free, detailed energy report outlining the energy efficiency of the property and which will suggest improvements both from an energy efficiency and environmental perspective. The bank is also committed to making an annual payment to Climate Care, another tree planting scheme aimed at offsetting carbon emissions. Therefore, both of these initiatives demonstrate a commitment to sustainable development.
Leading the Pack
It’s perhaps too early to say what the true motives are for the high street banks getting involved in financing sustainable development projects. However, although they have a low profile, by far the leading financial institution in this field is the Ecology Building Society and, where they are concerned, there is no doubting their motives and concerns about environmental issues and the impact of housing upon global warming. They set up in 1981 with just £5000 with a heartfelt commitment and a headstrong will to introduce environmental considerations into the financially motivated world of mortgage lending. They basically focus on offering financial assistance on run down, dilapidated property in need of renovation and new builds which have placed a significant emphasis on care for the environment. They’re also keen to encourage those who are building their own properties in a sustainable and environmentally friendly manner.
Its growth, though much less than the big global banks, is increasing at a steady pace and it handles over 100 loans a year using money from savings accounts. As they are using the money for mortgages not to invest in the stock market, it continues to attract environmentally conscious consumers looking for home finance, yet its rates are still, perhaps surprisingly, extremely competitive when compared to those of the main high street lenders.
It certainly goes without saying, however, that with a steady increase in both the number of houses being built and an increased awareness about housing and its impact upon the environment, there will be an inevitable increase in the number of financial lenders who will no longer be able to ignore their environmental obligations or they could end up losing customers as a result.