Methodology of Green Homes & Green Mortgage programmes
While each national Implementing Partner’s Green Homes & Green Mortgage programmes has been locally-adapted, the basic methodology as to how the programmes function follows a similar approach. Each Implementing Partner has created “toolkits” explaining the process for the essential stakeholders (banks, residential investors/developers) as well as communication support for explaining the benefits to citizens.
​
The following illustrates the roles and responsibilities of key participants of Green Homes & Green Mortgage programmes and the benefits received:
What are the challenges faced and action taken by each key partner in the process?
What solutions does the S4EU-ECoE and their national Implementing Partners offer?
Banks participating in the Smarter Finance for EU initiative
Determining which residential projects/homes should be eligible for discounted financing based on the energy and other green performance is a complex process requiring specific expertise. These banks agree to offer discounted green finance products for the purchase or renovation of a green home. Pricing loans and understanding the future cash flows and reduced financial risk of net zero energy / green homes requires a new approach to underwriting mortgages and other loans. Marketing these new green financial products requires an understanding of the values of the homebuyers, and the benefits of these homes provide.
The bank agrees to utilise the validated green homes certification approach of the national
Implementing Partner to ensure performance is achieved. Typically, this arrangement includes the Implementing Partner notifying the bank which in process and completed residential projects are or – pending successful completion of the green homes certification – will be eligible for the bank’s preferential green financing products.
Solutions available for banks through the S4EU-ECoE and national Implementing Partners include:
-
A Toolkit for Financial Institutions describing the rationale, methodology, roles & responsibilities, benefits, criteria and case studies of successful Green Homes and Green Mortgage programmes tailored for banks interested to understand, develop, launch and administer these programmes.
Toolkits from S4EU implementing countries
-
Sample legal agreements between the certifying bodies and residential developers interested in green construction loans or delivering homes to buyers who are eligible for preferential green financing.
-
Capacity building including the 10 course “Green Homes Accredited Finance Professional™ Programme” (described below).
-
Research regarding the financial valuation of green homes, mortgage default risk, climate risks.
-
Marketing tools that help the residential developer describe the value provided by net zero energy / green homes to potential homebuyers.
Residential investors / project developers
Investors and project developers going beyond the existing building code to deliver best-in-class net zero energy / green homes face several challenges. They often encounter “first mover” risk as their building approach may be unfamiliar to the construction industry or to buyers; requiring awareness building and training requirements beyond what would be necessary for “business as usual”. Homebuyers may be skeptical of the promised financial, quality and health benefits of net zero energy / green homes. Marketing teams may be unfamiliar with the value proposition of green homes and how to communicate this effectively.
Furthermore, understanding and successfully executing to achieve the ambitious energy and other green performance criteria required for homes to eligible for preferential green finance can be a complex process for design and construction teams new to the approach.
Solutions available for Residential Investors / Project Developers through the S4EU-ECoE and
national Implementing Partners include:
​​
-
A Toolkit for Residential Investors / Project Developers describing the rationale, methodology, roles & responsibilities, benefits, criteria and case studies of successful Green Homes and Green Mortgage programmes tailored for investors and developers interested to plan, design, build and sell exemplary green homes that are eligible for the discounted green mortgages offered by the SMARTER4EU bank partners.
-
Select bank partners provide preferential construction/development loans to invest in nZEB construction in the planning and construction phase. These loans reduce financial risk to the investors and project developers and provide funding early to the design and construction teams.
-
Independent, credible and ambitious green homes certifications offered by national Implementing Partners provide a proven methodology and assessment framework to guide design and construction teams successfully to qualify their residential projects and to give homebuyers confidence they will receive the benefits expected of green homes.
Residential certifications created or updated by SMARTER4EU partners during the project
​​​
-
Marketing tools that can help describe the value provided by net zero energy / green homes.
Short sample of concise green building benefits from Irish Green Building Council
Green Homes Certifiers and Energy Performance Certificate auditors
These key partners provide assurance the ambition energy and other green performance criteria
have been successfully achieved by the residential investors/project developers to ensure only
qualified projects receive the benefits of preferential green finance.
While an Energy Performance Certificate is mandated in all EU Member States and the building code has been elevated to net zero energy building approaches, there are still benefits to providing recognition and special financing to those projects that go above and beyond the minimum level of required performance.
These certifications provided by a SMARTER4EU Implementing Partner combined with a suitably
high scoring Energy Performance Certificate assure the residential project meets or exceeds the
requirements of the EU Taxonomy for Sustainable Activities including addressing the “Do No
Significant Harm” mandates.
Solutions available for Green Homes Certifiers and Energy Performance Certificate auditors through the S4EU-ECoE and national Implementing Partners include:
-
Research and guidance to ensure Implementing Partner’s green residential certification meets or exceeds the EU Taxonomy requirements using the Level(s) framework and European Committee for Standardization (CEN) standards to assure a quality approach.
-
Opportunities to connect qualified green homes certifiers and energy auditors with projects
seeking qualification in the Smarter Finance for EU initiative.
Citizens / homebuyers
Citizens seeking to buy or renovate homes are typically not involved in the construction sector and, if so, may not fully understand the value proposition of a sustainable construction approach. Often, European buyers over emphasize the “first costs” or sales price of the home and can discount the very important “Total Monthly Costs of Home Ownership” that includes utilities, repair and health costs. Homebuyers can be very skeptical about a residential developer or green homes solution provider’s claims of lower operating costs in exchange for higher upfront costs.
Solutions available for Citizens homebuyers through the S4EU-ECoE and national Implementing
Partners include:
-
Through the key partnerships described above, the homebuyer buying a certified green home is eligible to receive a preferential mortgage or other loan in terms of the cost of financing. A residential developer can access a construction/development loan as well. This mechanism converts a higher upfront cost to an equal or lower total cost of monthly ownership for a superior home.
SMARTER4EU banking and other financing partners offering preferential green mortgages,
construction/development, and other loans.
-
The Implementing Partner’s green residential certification and verification of the Energy Performance Certificate ensure the home has been designed and constructed to deliver the monthly financial performance.
-
A “Green Homes Guide” that residential developers can easily adapt to their specific project which explains to the new homeowner how to manage their home to assure the financial, quality and health benefits of a best-in-class net zero energy / green home are received.