Barclays is offering a cash reward of up to £2,000 to customers who make energy efficiency-related home improvements under a new green mortgage pilot scheme.
Dubbed the Greener Homes Reward, the ‘test-and-learn’ initiative aims to help reduce the real and perceived barriers for homeowners and see if this results in a greater uptake of greener home 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 solar panels, insulation, air source heat pumps or double or triple-glazed windows.
The chosen home improvement must, however, be completed by a TrustMark-registered business or tradesperson – which is the government-endorsed quality scheme that covers work consumers choose to have carried out in or around their homes.
A poll of 2,000 property owners, commissioned by the bank, found while the majority of homeowners hope to make energy efficiency-related home improvements within the next five years, three quarters admit they cannot afford them.
Around 57% believe their mortgage provide should help them with energy efficiency upgrades and 83% of homeowners said the removal of price barriers in the form of a cash reward would be most effective in encouraging them to make changes.
When asked about changes homeowners hope to make in the future, installing solar panels (57%) and solar hot water heating (42%) were the top priorities.
However, around 73% said the cost of the work is the primary issue holding them back, while 56% said 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.
Dr Pete Brooks, Barclays Behavioural Economist 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. 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.”