DMPM: Only financing energy label A homes is socially irresponsible
This column was originally written in Dutch. This is an English translation.
It sounds great, of course, a mortgage proposition only for energy label A homes. However, if we want to reduce the energy consumption of Dutch homes, making the old housing stock more sustainable is the fastest route, even if an A label cannot be obtained. By excluding the old housing stock from financing, it is made even more difficult for home seekers.
By Marck Bulter, Portfolio Manager at Dutch Mortgage Portfolio Management
There are more and more proposals for energy label A properties on the mortgage market, and that is not surprising. It is good for a certain group of consumers, who can count on a mortgage interest rate discount. It is also good for the investor, because they can demonstrate that they are investing in green. Furthermore, the value increases more quickly, there is more bidding over the asking price and an A-label collateral is sold more quickly compared to homes with a poorer energy label, as shown in a recent NVM report1. The exclusion of less energy-efficient homes therefore has many advantages compared to the easily-understood loss of interest income.
But what is the impact of an energy label A proposition? The statement that the impact is close to the zero line is perfectly defensible. Firstly, sustainability measures are hardly ever considered for label A propositions. This is because they are usually homes that were built after 2014 and already have an A label. Or they are homes with a B label, for example, that could become an A label home with a limited investment. Impact in terms of making the housing stock more sustainable is therefore hardly applicable. Where can a major impact be made in terms of sustainability? It is precisely in homes with a poor energy label, such as a G label. These homes have little or no insulation and usually have single glazing.
Secondly, mortgage providers also have a social duty when financing homes, the S in ESG. This is hardly the case when only financing label A homes. These are often in the higher segment. First-time buyers are therefore not helped when entering the housing market. In addition, given the shortage of 400,000 homes, first-time buyers have other priorities than the energy label. They are happy with any affordable home, regardless of the energy label. Finally, it is very difficult for part of the market to become more sustainable, such as apartments within a Homeowners‘ Association and listed buildings. Within a Homeowners’ Association, the majority must agree to sustainability measures. In addition, the law on listed buildings makes it practically impossible to make a listed building sustainable, for good reasons of course.
There is also a danger in excluding homes with a poorer energy label if A-label propositions continue to gain in popularity. This makes it increasingly difficult for potential buyers of non-A-label homes to get a mortgage. And how does that work for refinancing with a relatively poor energy label? Will this group of people soon run into a brick wall too?
Society and the climate will benefit from improving the existing housing stock, because this is where progress can be made quickly. And that is exactly what is so desperately needed. The current and growing housing shortage of 400,000 has a real impact on society. Partners have to postpone moving in together, 18+ year olds who want to live independently have to postpone this wish and couples who want to separate also have their lives made more difficult. That is why society cannot afford such a selection policy. Mortgage providers must fulfil their social role here and not just pick and choose. After all, every home and every resident counts.
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