The change means buyers purchasing one of these homes could borrow up to £30,000 more.
Octopus’ Zero Bills is an energy tariff which applies to homes ready built with energy efficiency enhancements such as heat pumps, batteries and solar panels.
Customers moving to these new-build homes are guaranteed to have no home energy bills for at least five to 10 years.
Octopus Energy aims to deliver 100,000 Zero Bills homes by 2030, and has already rolled out the initiative in Germany, France, New Zealand, and the UK
Santander has recognised the reduction in bills this will afford buyers of these properties and has applied the affordability boost.
Indeed, the updated affordability assessment will reflect the lower household outgoings associated with Zero Bills homes and could increase the amount some customers are able to borrow.
For example, customers purchasing a five-bedroom family home could potentially access up to £30,000 more compared with Santander’s standard affordability assessment.
Sean Pape, head of homes propositions at Santander UK, said: “As the first major bank to recognise the benefits of Octopus Energy’s Zero Bills homes within our affordability assessment, we’re helping customers make the most of lower household outgoings when buying an eligible new build home.
“By taking into account the 10-year Zero Bills guarantee from Octopus, this provides greater flexibility in the amount some customers are able to borrow, helping more people access homes that are designed to be energy efficient and more affordable to run.”
What’s the expert verdict on the scheme? What to consider
Mortgage brokers have applauded Santander’s efforts in supporting both improving affordability and encouraging sustainable homes. But there are concerns that the limited supply of these types of homes make the mortgage less accessible.
Matt Coulson, founder at Rickmansworth-based Heron Financial, speaking to the Newspage Agency said: “Credit to Santander and Octopus for this, and I mean that. Recognising that a home with no energy bills is cheaper to run, and letting that count towards what someone can borrow, is exactly the right principle.”
He added: “The only real catch is one of reach. It applies to new-build Zero Bills homes, when the bigger prize is the millions of existing homes that will never be built to this standard.
“To be fair, the market has started to move there too. More lenders now offer green and retrofit lending, and those products are getting better, even if they aren’t perfect yet.
“The next step is scaling that thinking to the leaky Victorian terrace, and joining up the mortgage, the grant and the installer so the homeowner isn’t left to coordinate all three. This is a very good start, and I’d like to see the rest of the market follow Santander’s lead.”
Meanwhile, Martin Rayner, financial Adviser at Compton Financial Services, told Newspage there was something else borrowers should consider.
“[Buyers] also need to ask whether they are paying a premium for the property itself,” he said.
“If the purchase price is significantly higher, the savings on energy bills could be offset by the extra mortgage and interest over time. This is not a reason to dismiss the scheme. For many buyers it could provide greater financial certainty, protection from future energy price rises and a more environmentally friendly home.
“The key is to compare the total cost of ownership against other properties, rather than looking at energy bills in isolation. More innovation and more choice for buyers is always welcome, provided consumers understand exactly what they are paying for.”