Mortgage holders with one UK bank could bag themselves up to £2,000 for use on green improvements if a trial proves successful. Barclays says it would start paying up to this figure to its mortgage holders to 'pay back' customers who install new insulation, heat pumps or solar panels, among other green solutions.
The bank is running the trial after research showed that while most of the homeowners it surveyed wanted to improve the energy efficiency of their homes, three in four said they couldn't afford changes they want to make within the next five years. Most are only making small-scale improvements which do not cost much up front such as changing old light bulbs for more energy efficient versions.
Speaking to August Graham, business reporter with PA news agency, Barclays chief executive CS Venkatakrishnan, said: “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."
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Dr Pete Brooks, a behavioural economist at Barclays, said: “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".
The expert continued: “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.” Around a quarter of people surveyed said that the payback period on energy saving investments puts them off spending the cash up front.
The full £2,000 will be available for homes installing heat pumps, while those opting for solid wall insulation or solar panels will be able to get £1,000 and a smaller £500 payment will be available for loft insulation or new windows, among other initiatives. Work will have to be performed by a TrustMark-registered business or tradesperson, Barclays said. TrustMark is a Government-backed scheme.
The UK Government's 'boiler upgrade scheme' offers homeowners grants to cover part of the cost of replacing fossil fuel heating systems with a heat pump or biomass boiler. You can check eligibility for this on the Government website.
The bank added that it would use the data that it collects during the pilot project to help roll-out wider home improvement support measures in the future. Its initial research found that the best way to drive more energy efficiency improvements in people’s homes was simply to give them cash to do so.
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