Santander has partnered with Octopus Energy to offer a mortgage boost for buyers of new-build homes with no energy bills. The bank will exclude utility costs from affordability calculations for eligible properties, potentially increasing borrowing power by up to £29,000.
The deal applies to homes fitted with solar panels, battery storage and heat pumps that qualify for Octopus Energy's Zero Bills tariff, guaranteeing no household energy bills for at least 10 years. Santander's approach removes those costs from affordability checks, allowing larger loans.
Industry Reaction
The announcement comes amid a busy mortgage market, with Santander having raised fixed-rate mortgages by up to 0.3% a day earlier. Mortgage brokers praised the move as reflecting real-world running costs.
Matt Coulson, founder of Heron Financial, said: "Credit to Santander and Octopus for this, and I mean that. Recognising that a home with no energy bills is cheaper to run, and letting that count towards what someone can borrow, is exactly the right principle." He warned the offer is limited by the number of qualifying homes, as it applies to a specialist corner of the new-build market.
"The only real catch is one of reach," he said. "It applies to new-build Zero Bills homes, when the bigger prize is the millions of existing homes that will never be built to this standard."
Broader Implications
Stephen Perkins, managing director of Yellow Brick Mortgages, said affordability checks should reflect total homeownership costs. "If a property genuinely costs less to run, it's logical that this is recognised in affordability assessments. The key is making sure those savings are real and sustainable, which is why the guarantee behind this proposition is so important."
David Stirling of Mint Wealth noted the move stands out amid rising rates. "In a week dominated entirely by lenders raising rates, Santander has done something refreshingly different and delivered actual good news. By removing energy bills from its affordability assessment for Octopus Zero Bills homes, borrowers could unlock up to £29,000 in additional borrowing capacity."
He added that buyers should assess the home itself before fixating on free energy: "The proposition is bold and the guarantee is contractual, though buyers should ensure the house stacks up on its own merits before the zero bills figure does all their thinking for them."
The launch signals lenders are paying closer attention to energy efficiency when pricing and assessing mortgages. For buyers who can secure a qualifying property, the combination of bigger borrowing potential and a decade without energy bills could be appealing, but brokers advise checking total long-term costs before committing.
