"There is a clear need to improve the energy efficiency of UK housing, but as our data indicates, cost remains a barrier to turning desire into action."
Barclays is piloting a new Greener Home Reward scheme which provides up to £2,000 to Barclays residential mortgage customers that make selected home energy efficiency-related improvements.
No additional lending is required to benefit from the scheme and all new and existing Barclays UK residential mortgage customers are eligible.
Customers can choose to install any one of several home improvements, including an air-source heat pump, double or triple-glazed windows, solar panels, or home insulation. The chosen home improvement must be completed by a TrustMark-registered business or tradesperson.
Research from Barclays found that 75% of homeowners intend to make energy efficiency-related changes to their homes, with the vast majority (90%) hoping to make improvements within five years.
Despite these intentions, cost is a prohibitive barrier, with 73% of respondents being unable to afford energy efficiency-related changes and favouring smaller-scale lifestyle changes over larger, structural ones.
While 69% have already made some level of energy-efficient improvements, these mostly relate to changes associated with lower upfront costs, such as installing energy-efficient lighting (29%).
When asked about the changes homeowners hope to make in the future, installing solar electricity panels (57%) and solar hot water heating (42%) were the top priorities.
More than seven in 10 (73%) state that the cost of the work is the primary issue holding them back, while 56% say they lack sufficient cashflow to pay the upfront costs. The perceived lack of immediate return on investment, or ‘payback period’, also played into the decision-making process, with 23% admitting this puts them off.
In addition, the majority of homeowners (57%) believe their mortgage provider should help them to make energy efficiency-related home improvements. Over four fifths (83%) of homeowners report that the removal of price barriers in the form of a cash reward would be most effective in encouraging them to make changes.
The data and insights collected throughout the pilot will inform Barclays’ product development as it looks to roll-out wider home improvement support measures in the future.
C.S. Venkatakrishnan, group CEO at Barclays Bank, commented: “There is a clear need to improve the energy efficiency of UK housing, but as our data indicates, cost remains a barrier to turning desire into action.
“We hope this pilot will go some way towards encouraging consumers to make energy efficiency-related home improvements.”
Dr Pete Brooks, behavioural economist at Barclays, added: “When weighing up the costs and benefits of retrofitting, a behavioural bias called ‘hyperbolic discounting’ often comes into play, which in essence means that we tend to prefer smaller, immediate rewards over larger payoffs further down the line. With the expected payback period for some home improvements clocking in at over a decade, these larger options may be overlooked. Even if the long-term benefits might be greater, the end result is often inaction.
“To overcome this, our latest initiative helps provide a more immediate reward to our residential mortgage customers to help with the cost of making energy efficiency-related home improvements. Couple this with providing helpful information to consumers to help them make informed choices and we hope to encourage more people to overcome their human biases.”
