Homeowners could be offered better mortgage rates for improving the energy efficiency of their homes under plans rolled out by the government today.

The Department for Business, Energy and Industrial Strategy unveiled a new £5m fund to support lenders in driving “green mortgages” ahead of the launch of the government’s green finance strategy. Green mortgages offer customers discounted mortgage rates once they have upgraded the energy rating of their home.

The green finance strategy is set to be launched alongside the Green Finance Institute, which Chancellor Philip Hammond announced last year in a bid to accelerate eco-friendly finance investment.

The plans have been revealed shortly after the UK was named as the first major economy to pass legislation committing to net zero emissions by 2050. Currently, British homes account for around 15 per cent of the country’s carbon emissions and as the UK moves to a net zero economy, the government has committed to making more buildings cleaner, greener and fit for the future.

Commenting, Energy and Clean Growth minister Chris Skidmore said: “To fulfil our world-leading commitment to reach net zero emissions by 2050, we need an overhaul of our housing stock to tackle the disproportionate amount of carbon emissions from buildings.

“By rolling out more green mortgages and reducing the costs of retrofitting older homes we’re encouraging homeowners to improve the efficiency of their homes and save money on their energy bills, helping to ensure everyone has access to a warm and comfortable home.”

Furthermore, the government also announced it would offer industry the chance to win a share of a £10 million innovation fund if companies design innovative ways of reducing the cost of retrofitting the UK’s old housing stock. This could include assembling parts of buildings like pre-fabricated roofs or facades off-site and quickly fitting them to homes, minimising disruption for homeowners.

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