QUEEN’S BUSINESS SCHOOL FINANCE SEMINAR SERIES

Wednesday 26^th November

1pm

“How to fund the transition of Home Energy Efficiency improvements?”

Tripti Sharma

QUB/QBS

Abstract

UK housing stock is one of the oldest in Europe and among the least energy efficient. Multiple government-backed retrofit schemes have been insufficient to achieve home retrofit targets needed to achieve UK’s legally binding commitments to net zero carbon emissions by 2050, primarily due to underfunding and short-term funding cycles. In this paper, we investigate the feasibility of financing home energy efficiency transitions through green additional borrowing mortgages and equity release mortgages, by quantifying the cost of energy efficiency upgrades and the amount of housing equity that could be borrowed through these products, while considering multiple lending criteria and household preferences. Using the English Housing Survey, we demonstrate that one-third of households living in energy-inefficient houses would be excluded from accessing one of these mortgage products. These households are more likely to be on means-tested or disability benefits, and are concentrated in the North, Midlands and South West regions. Our study contributes to the literature by providing evidence on whether access to private sector funding requiring robust collateral for financing energy efficiency retrofits at low interest rates is feasible for all UK households without government intervention.

QBS Conference Hub, Seminar Room 01.012