The finance industry is calling for urgent Government intervention to help stimulate demand for green home improvements as the current uptake of heat pumps, insulation, and solar panels is falling dramatically short of carbon reduction targets.

UK Finance has released a new report, with its Director of Sustainability Policy, Ian Bhullar (pictured), warning that ambitious targets cannot be met without driving public demand and convincing homeowners of the benefits.

Unlocking Demand

The report, titled Unlocking Demand for Green Home Finance, draws on YouGov research and reveals that 54 per cent of consumers cite high upfront costs as the main barrier to heat pump adoption, although 44 per cent say they would switch if provided with clear savings information.

Bhullar says. “Lenders are committed to playing their part and through the Government’s upcoming Warm Homes Plan, we have the opportunity to really make a difference.”

The organisation sets out nine recommendations for inclusion in the plan, including

1. Establishing a government-led body or group to drive collaboration across key stakeholders
2. Providing certainty for firms involved in retrofitting
3. Launching a public awareness campaign with independent guidance to counter misinformation
4. Providing grants, subsidies, and a coordinated plan to train sufficient tradespeople
5. Rebalancing electricity and gas prices through adjustments to levies/ targeted support
6. Deploying government funding to enable lower-cost green home lending
7. Maintaining and expanding grant programmes to support green home improvements
8. Setting clear long-term expectations so households and firms can prepare
9. Updating energy efficiency metrics for accurate property performance and consistency

UK Finance argues that increasing demand for green home improvements will bring significant benefits, stimulate job creation, drive innovation and reinforce the UK’s energy security in an increasingly volatile global market.

It is clear that costs are a barrier for many people when it comes to switching to these low carbon alternatives.”

NAEA Propertymark President, Toby Leek, supports the call for action but warns against blanket approaches. “It is clear that costs are a barrier for many people when it comes to switching to these low carbon alternatives.

“At the same time, it is vital that the UK Government avoids a one-size-fits-all approach towards energy efficiency, as older properties are not always able to add heat pumps.”

Current government schemes include the Boiler Upgrade Scheme, offering households in England and Wales £7,500 towards replacing old boiler systems with heat pumps.