Improving Citizens’ Health, Comfort and Financial Well-Being by Supporting Banks, Residential Investors and Solution Providers with Green Homes and Green Mortgage programs.
The project uses comprehensive Green Homes certifications to assess and recognize top performing residential projects incorporating sustainable construction principles.
Evidence from financial and technical modeling have proven that investing in energy efficiency and other green building attributes for homes:
- Improves housing quality
- Reduces the total monthly cost of ownership for the homeowner
- Increases sales prices for the project developer/investor and substantially
- Reduces substantial financial risk for the bank offering the mortgage on the home
The existing program includes over 25 projects representing 6.000 housing units certified or in process.
The SMARTER Finance for Families (SMARTER) will create “on the ground” operational and self-sustaining Green Homes and Green Mortgage (GHGM) programmes in 11 European countries. While “energy efficient mortgages” exist, SMARTER brings an innovative approach with a heavy focus on addressing all key stakeholder motivations and concerns with a focus on the end consumer or families that must ultimately choose to use the green finance products created. The full GHGM programme has already been tested successfully in one market but the SMARTER project will bring valuable research support to remove real and perceived barriers to the systemic challenge inhibiting GHGM programmes’ development to date.
While the prime objective of SMARTER is to introduce “Innovative financing for energy efficiency investments” the most important enabler of this is to create citizen-driven demand for green finance. By demonstrating the benefits of shifting spending attitudes toward a “total cost of monthly ownership” view of the cost of their home purchase or new construction or renovation project and, in doing so, unlocking a critical increase in construction budgets ( often ranging from 15 to 25%) without increasing monthly costs to families. This allows not only buying “less bad” homes but rather buying homes that reach the highest levels of energy, comfort, health and performance while reducing the financial through lower total monthly costs – applying to all housing types from low-income housing to luxury housing and single family homes to multi-unit residential. Citizen-driven demand will help convince Residential Investors/Developers to build to a high EE/Green standard who will be rewarded with positive market differentiation, availability of discounted finance to facilitate purchasing their homes, and ultimately greater sales and Return On Investment success.
Most good business ideas eventually become reality. Why do we not have Green Homes & Green Mortgages if the business case is clear? The lack of a natural development of Green Homes & Green Mortgage programmes is the result of a systemic problem. In large part, it represents a classic “chicken & egg” scenario but with far more parties and dimensions involved.
Classic business strategy teaches – and for good reason – that it is very risky to try to push a product or service into a market that doesn’t yet know it wants it. Therefore, banks haven’t developed Green Mortgage products because they haven’t seen the demand from consumers or qualified projects from Residential Investor/Developers. Investor/Developers don’t build projects to this standard as they haven’t seen the demand from consumers. Consumers don’t ask for either Green Homes or Mortgages since they aren’t aware of the benefits and don’t see relevant opportunities in their local market (and advertising on the concept is non-existent).