The change means buyers purchasing one of these homes can borrow up to an additional £30,000.
Octopus’ Zero Bills are an energy tariff that applies to modular homes built with energy efficiency improvements such as heat pumps, batteries and solar panels.
Customers moving into these new homes are guaranteed to pay zero home energy bills for at least five to ten years.
Octopus Energy aims to provide 100,000 homes with zero bills by 2030, and has already rolled out the initiative in Germany, France, New Zealand and the UK
Santander has recognized the reduction in bills that buyers of these properties will incur and implemented the affordability boost.
In fact, the updated affordability rating will reflect lower household expenses associated with Zero Bills homes and could increase the amount some customers can borrow.
For example, customers purchasing a five-bedroom family home could get up to £30,000 more compared to Santander’s standard affordability rating.
Sean Beebe, Head of Home Offers at Santander UK, said: “As the first major bank to recognize the benefits of Zero Bills homes from Octopus Energy within our affordability assessment, we are helping customers make the most of lower household expenses when purchasing a qualifying new build home.
“By factoring in Octopus’ 10-year Zero Bills guarantee, this provides greater flexibility in the amount some customers can borrow, helping more people access homes designed to be energy efficient and affordable to run.”
What is the experts’ verdict on the chart? What to consider
Mortgage brokers have praised Santander’s efforts in supporting improving affordability and promoting sustainable homes. But there are concerns that the limited supply of these types of homes makes getting a mortgage less easy.
Matt Coulson, Founder of Heron Financial is based in Rickmansworth“We give Santander and Octopus credit for this, and I mean it,” he told Newspage. “Realizing that it’s cheaper to run a home without energy bills, and allowing that to borrow within what anyone can borrow, is absolutely the right principle.”
He added: “The only real catch is that it has to be accessible. This applies to new homes built without invoices, while the bigger prize is the millions of existing homes that will never be built to this standard.”
“To be fair, the market is starting to move there too. More lenders are now offering green and retrofit lending, and those products are getting better, even if they are not perfect yet.”
“The next step is to extend this thinking to the leaky Victorian porch, combining the mortgage, grant and fixer so that the homeowner is not left to coordinate all three. This is a very good start, and I would like to see the rest of the market follow Santander’s lead.”
Meanwhile, Martin Rayner, financial advisor at… Compton Financial Servicestold Newspage there’s something else borrowers should consider.
“(Buyers) also need to question whether they are paying a premium for the property itself,” he said.
“If the purchase price is significantly higher, the savings on energy bills can be offset by the additional mortgage and interest over time. This is not a reason to reject the scheme. For many buyers, it can provide greater financial certainty, protection from rising energy prices in the future, and a more environmentally friendly home.”
“The key is to compare the total cost of ownership with other properties, rather than looking at energy bills in isolation. We always welcome more innovation and more choice for buyers, provided consumers understand exactly what they are paying for.”
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