Octopus Energy and Santander have launched the UK's first high-street bank mortgage specifically designed for Zero Bills homes, a groundbreaking initiative that could reduce household energy costs to £0.
What is the Zero Bills Mortgage?
The new mortgage is available on selected newbuild homes that are eligible for a guaranteed 10 years of no home energy bills, thanks to Octopus's world-first Zero Bills energy tariff. This tariff, launched in 2022, equips homes with cutting-edge green technology including heat pumps, batteries, and solar panels, ensuring homeowners pay nothing for their energy bills for at least 5-10 years.
How Does It Benefit Homebuyers?
Santander's Zero Bills mortgage recognizes that homeowners have lower monthly outgoings due to the guarantee of no energy bills. This means eligible buyers could borrow up to £30,000 more than they would for a similar home with typical energy costs. The mortgage reflects the guaranteed savings, making energy-efficient homes more accessible.
Nigel Banks, Zero Bills Director at Octopus Energy, said: “Not all homes cost the same to live in, so they shouldn't all be treated the same when it comes to mortgages. Zero Bills homes come with guaranteed no home energy bills, giving homeowners lower monthly outgoings from day one. This mortgage with Santander recognises that lower cost of living, helping more buyers access cleaner, smarter homes and brings the benefits of Zero Bills living to even more people.”
Expert Reactions
Ben Merritt, Head of Mortgages at Santander UK, commented: “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 newbuild 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.”
Ryan Jude, Programme Director at the Green Finance Institute, added: “The £242 billion flowing through the UK mortgage market each year is one of the most powerful levers we have to help households upgrade to warmer, more efficient homes. Santander’s enhanced affordability offer opens the door for more people to invest and upgrade with confidence, building momentum behind a more innovative mortgage market. The GFI has long supported the role of enhanced affordability in the green mortgage market to support homeowners with low or no energy bills to be able to borrow more, and we are delighted to see Santander put this concept into practice.”
Impact on the Housing Market
This partnership marks a significant step in integrating energy efficiency into mortgage affordability assessments. By recognizing the lower cost of living in Zero Bills homes, Santander and Octopus are paving the way for more sustainable housing options. The initiative is expected to encourage more developers to build energy-efficient homes and help buyers overcome the upfront cost barrier of green technology.
