Triodos stops giving full mortgages for unsustainable homes

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From August 1, Triodos Bank will no longer give 100 percent mortgages for homes with an energy label of C or lower, unless the prospective homeowner has concrete plans to make the home more sustainable. An exception will be made for apartments, as these are harder to change individually, Jeroen Pels, director of mortgages at Triodos Bank, said to newspaper Trouw.

"We want to encourage homeowners to save energy. We do this by providing insight into how good and profitable an investment in insulation is, for example. This will reduce the monthly expenses," Pels said. Unsustainable homes are a financial risk, according to the bank. "If you have high energy costs every month, you also have less money for the mortgage payments and you can borrow less, plus your house loses value." 

When issuing a mortgage for an unsustainable home, Triodos will therefore only go up to 90 percent of the home's market value. Conversely, homeowners who make their homes more sustainable will be able to borrow up to 106 percent of the home's value. An exception will be made for apartments, because it is difficult to influence the sustainability of an entire apartment building one flat at a time. 

The main goal with this step is to make people more aware of the importance of sustainability, Pels said. "But we also do this to prevent over-crediting. The monthly costs of an inefficient home are higher, and as soon as the energy transition starts, houses with a bad energy label will lose value at an accelerated rate. It is especially important for these households that other standards be introduced. Otherwise they will get the bill later."

Triodos hopes that the lending standards will eventually change across the industry. "The discussion has been going on for years, and there is quite a lot of support for it but it is not happening yet. It is then said that the national loan standards do not look at what kind of car people drive or what their hobbies are. Nevertheless, we believe that you can look at the energy label because it is directly about the house and the height of the fixed costs. So we are no longer waiting for what the other banks are doing."