NEWS: NatWest Launches Buy to Let Green Mortgage and Leeds BS Offer Offset Carbon Emissions Incentive

23-November-2021 10:50
in News
by Sam Hodgson
NatWest Launches Buy to Let Green Mortgage and Leeds BS offer Offset Carbon Emissions Incentive

NatWest are launching green mortgage incentives this week for buy to let (BTL) properties, and Leeds Building Society have announced a carbon offset scheme for their fixed rate products.

With the government aiming to ensure all mortgage lenders have an average Energy Performance Certificate (EPC) of at least C by 2030 across their entire property portfolios, we can expect more and more eco-friendly mortgage products to come to the market.

And with energy prices rising across the country, green mortgages are becoming more attractive to buyers who see the long-term value potential in green homes.

What is NatWest’s Green Buy to Let Mortgage?

NatWest already offer green residential mortgages, but this week are launching a green mortgage product for buy to let property buyers as well.

If your buy to let property has an Energy Performance Certificate of A or B, then you can qualify for discounted mortgage rates for a purchase or remortgage.

Related Blog: How to Get a Green Mortgage - Could you Save Thousands on your Mortgage and Energy Bills?

green mortgages

Why should you get a green mortgage for your buy to let property?

There are a few key reasons why green buy to let mortgages are becoming more attractive:

  • To qualify, you’ll need to improve your home’s energy rating which will reduce the energy bills for your tenants in the process, making your property more attractive for renters.
  • You can get cheaper interest rates with a NatWest buy to let green mortgage or other rewards through different mortgage lenders.
  • Your home will benefit from ‘green value’, a term in the industry that refers to a property's potential to rise in value in response to climate change, legislation being enforced across the UK, and energy prices potentially continuing to rise.
  • The government plans to enforce new legislation that all buy to let properties meet an EPC rating of C by 2025 for new tenancies, and by 2028 for existing contracts.
  • Therefore you may be legally required to get your BTL to an energy rating of C anyway, so taking it one step further may not be too expensive.

Luther Yeates

Luther Yeates

Head of Private Clients

For some current numbers: on a £1m mortgage, a reduced rate of up to 0.06% is available.

This sounds small, but over 5 years it would save you £3,000.

But I expect if you improve your home to meet green lending criteria you would save on your electric or gas bill as well, so the potential for savings is even greater.

Leeds Building Society’s Carbon Footprint Benefit

Leeds Building Society have also announced that they will offset 100% of the carbon emissions from your home on all their fixed rate mortgage products for two, three, five and ten year fixed terms.

Regardless of the energy rating of your property, you can qualify, as long as you’re taking out a fixed mortgage with the lender.

It won’t get you any cheaper rates like a green mortgage, but with housing reportedly responsible for 14% of the UK’s emissions, having your mortgage lender offsetting your own home’s carbon impact gives you peace of mind.

Danske Bank’s Carbon Neutral Mortgage

Leeds BS’s new incentive follows in the footsteps of Danske Bank, who launched the first carbon neutral mortgage in June 2021 as certified by the Carbon Trust.

Key details:

  • Danske’s incentive promises to offset the carbon that the lender produces throughout a mortgage lifecycle.
  • They estimate this to be 96kg CO2e – the equivalent of driving an average car for 241 miles.
  • They offset the carbon by investing in projects that reduce emissions by the same amount as those generated by providing their mortgages.
  • The company also offers a cash back reward of up to £2,000 for their carbon neutral mortgage as a reward for choosing a greener home (this product is only available to properties with an EPC band between A and C in the UK).

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From private banks to high street lenders and building societies, to specialist mortgage lenders - we consider options from the entire mortgage market to ensure we’re getting the best deals for our clients.

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