Specialist buy to let lender Paragon has taken the unusual step of issuing a so-called Green Bond to fund attempts to make the private rental sector more energy efficient.
A green bond is a financial instrument raising money specifically for climate and environmental projects; in Paragon’s case, this is a £150m bond, quickly sold out. It is the first UK bank to issue this kind of bond.
The proceeds will be allocated to green loans incentivising landlords to mitigate climate change.
The Paragon Group has recently launched green product offerings in the buy to let mortgage market to support landlords in improving the energy performance of their properties in the private rented sector, and it says it intends to introduce green initiatives across other lending areas.
A statement from the lender says housing is currently responsible for 22 per cent of the UK’s greenhouse gas emissions.
Under recent government proposals, all property let to new tenancies must have an Energy Performance Certificate rating of at least C by April 2025, and this requirement will apply to the entire private rental sector by 2028.
The government has an overall target of making the UK’s housing stock carbon neutral by 2050.
“This Green Bond demonstrates our commitment to support more landlords improve the energy performance of their rental properties, reducing carbon emissions as well as energy bills for tenants” explains Nigel Terrington, Paragon chief executive.
He adds: “Under the government’s ambitious plans, 2.9m rental homes will need to improve energy performance over the next few years. Government, landlords and lenders should work together to meet this target, and green finance will play a critical role.
“We’re delighted to have received overwhelming support from the investment community on our plans to put sustainable lending at the heart of our strategy.”
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It is not lack of finance that is holding LLs back from improving energy efficiency in their properties - it is that the measure used is opaque and ever changing. Trying to improve your EPC rating is like trying to hit a moving target without blindfolded.
Give us a clear set of goals based on a consistent policy and we will invest in our properties. At present we are being asked to invest large sums of money with unpredictable results and no guarantee of being able to continue to rent our properties out.
And please bear in mind that if LLs are forced to spend large sums of money on their properties they will look to recoup through rent. We are, after all, a business nor an environmental charity!
It's a loan, and loans have to be paid back with interest, so lets say the monthly repayments are £100, that's a £100 per month rent rise, yes fine I'll do it, because I won't be paying for it, poor tenant gets clobbered yet again.
Yet millions of owner occupied houses are not forced to be energy efficient.
Housing responsible for 22% of green house gases? Fine, so why target only 2.9 million privately rented properties to reduce a very small proportion of this 22%.
Why not target ALL properties and reduce this 22% in ALL properties across the entire country?
If the benefits outweigh the costs, then everyone wins.
Wait a minute. ....
Perhaps the costs are too high to justify the measures?
Perhaps voters don't want to pay?
Perhaps private tenants are regarded as too thick to realise they will foot the bill without gaining lower energy bills?
Actually, perhaps the politicians are right on all of the above?
its all bollox--uk emits minimal
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