3 Million UK Homes Eligible for Green Mortgages

Green Residential Mortgage-Backed Securities are worth an estimated £190 billion in the UK, providing the critical funds needed to improve household energy efficiency.


£190 Billion Industry


Securitising homes that have achieved an EPC grade A and B could offer a recapitalisation opportunity to the tune of £190 billion, according to a report by geospatial technology company, Kamma.

 Government targets for improving UK property suffer from a major gap in funding, yet green securitisations could more than cover this gap, unleashing a green funding revolution in the UK marketplace.




The UK government, hosts of COP26 later this year in Glasgow, have set the most ambitious climate targets in the world: to reduce emissions by 78% by 2035. UK property contributes 22% of total emissions, yet the end of the Green Homes Grant scheme leaves no clear solution or roadmap for improving household energy efficiency and reducing emissions.

Government proposals so far have pointed to an increased role for the private sector, with mortgage lenders set to take increased responsibility for delivering an average EPC grade C by 2030. As Kamma has previously reported, in England and Wales alone this creates a bill to the tune of £48.3 billion, with no clear indication of who is picking up the tab.

Kamma CEO, Orla Shields said: “Hosting the UN’s Climate Change Summit is putting yet more pressure on the UK government to lead the way in their commitment to fighting climate change. So far, they’ve only set targets and laid out the scale of the challenge. In the search for solutions, we believe the time is now for green RMBS.”


Popularity of Green Investments


Recent market data shows a dramatic increase in the popularity of green investments, which grew by 96% last year to some £288 billion globally.

Orla Shields comments: “This is no longer just about investors supporting sustainability goals. With a wave of new regulation about to hit the UK market, consumer sentiment and spending favouring green brands and an increase in ESG investment, banks are starting to wake up to the financial, as well as environmental, benefits of ESG products. Proposed regulations for the UK housing market, for example, could dramatically alter the value of energy inefficient homes. Greener investments are becoming the more profitable investments.”

Kamma points to the world-leading example of the Dutch bank Obvion, who double qualified their RMBS with both green underlying assets and green use of proceeds. Directing their re-capitalised funds into green loans qualified another wave of homes for green RMBS, creating a virtuous circle of green lending. Repeating this at a UK market level would create a revolution in green investing and funding available.

A favourable market, with investors paying a premium for better performing sustainable assets, incentivises mortgage lenders to offer green RMBS, thereby increasing lending and lowering interest rates on energy efficient homes. In turn, this incentivises property owners to reduce emissions, creating a virtuous circle that accelerates the transition to a greener world.