As the cost-of-living crisis continues to squeeze household finances and 73% of respondents report being unable to afford energy efficiency-related changes, Barclays is trialling a ‘test-and-learn’ cash reward initiative to help reduce the real and perceived barriers for homeowners, to see if this results in a greater uptake of greener home improvements.
New initiatives are needed to drive change
With 57% saying they believe their mortgage provider should help them to make energy efficiency-related home improvements, Barclays is combining behavioural science with consumer research to inform its support for customers. 83% of homeowners report that the removal of price barriers in the form of a cash reward would be most effective in encouraging them to make changes. In response, Barclays today announces the launch of its Greener Home Reward scheme to encourage homeowners to make their intentions a reality.
The Greener Home Reward provides up to £2,000 to Barclays residential mortgage customers that register for the cash reward online and then make and pay for a selected home energy efficiency-related improvement. 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 an air-source heat pump, double or triple-glazed windows, solar panels, or home insulation. The chosen home improvement must be completed by a TrustMark-registered business or tradesperson – TrustMark is the Government-endorsed quality scheme that covers work consumers choose to have carried out in or around their homes.
The data and insights collected throughout the pilot will inform Barclays’ product development as it looks to roll out wider home improvement support measures in the future.
Homeowner attitudes towards sustainability and the barriers preventing consumer action
The research sheds light on current attitudes towards sustainability and energy efficiency, as well as the barriers preventing homeowners from making changes. 76% say they consider themselves to be environmentally conscious and that they are taking steps to become more sustainable. Yet when asked to explain the measures they are taking, the vast majority fall under the banner of lifestyle choices, with 73% saying they avoid or minimise food waste and 62% seeking to reduce their use of central heating.
In contrast, when analysing homeowners’ attitudes towards larger-scale changes, there is significantly more inertia. While 69% have already made some level of energy-efficient improvements, these mostly relate to changes associated with lower upfront costs, such as installing energy-efficient lighting (29%).
When asked about the changes homeowners hope to make in the future, installing solar electricity panels (57%) and solar hot water heating (42%) were the top priorities. The findings support the hypothesis that while there is a strong desire to be more energy conscious, in reality, larger more long-term solutions remain out of reach for the majority of homeowners.
73% state that the cost of the work is the primary issue holding them back, while 56% say they lack the sufficient cash flow 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.
C.S. Venkatakrishnan, Group Chief Executive Officer, Barclays Bank, comments: “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.”
Dr Pete Brooks, Barclays Behavioural Economist, adds: “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.”
Martel Maxwell, Property Expert and Presenter, says: “Almost every homeowner I meet wants to be greener, but so often cost is holding them back. They continue to make smaller changes for years, but in their heads and hearts want to make a big difference. The research from Barclays backs this up – with three-quarters of homeowners saying they are planning to change how they heat and power their home – and nine in 10 saying they hope to do that in the next five years.
“I know what it’s like to take that leap; when we built our home six years ago, we went ‘renewable’ installing everything from solar panels to a ground source heat pump, triple glazing and lots in between, which was a big undertaking.
She continues: “However, there’s no doubt it can be daunting financially, so that’s why the pilot of Barclays’ Greener Home Reward is such good news, because it helps homeowners start to make those changes. It’s worth up to £2,000 and is available to residential mortgage customers who make eligible energy efficiency-related home improvements. It’s a great way to help get your plans finally moving forward and to take those first steps with confidence.”
To support consumers in making greener choices, Barclays is also introducing a new Sustainability Hub for its retail customers, that will focus on educational content relating to ‘Greener Homes’ and ‘Greener Travel’. The hub will evolve over time to include a wide selection of tools, resources and content on sustainability-related topics. More information about the Greener Home Reward can also be accessed via the hub: barclays.co.uk/sustainability
