The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members. 

Overview

Santander UK and Octopus Energy have partnered to develop an innovative mortgage proposition that recognises the lower cost of living associated with highly energy-efficient homes. In July 2026, Santander became the first major UK high street bank to support Octopus Zero Bills homes, by removing monthly energy bills from the affordability assessment. This enables customers to borrow up to £29,000 more when buying these homes. 

The proposition was informed by insights from Santander's Tomorrow's Homes Report 2026, which highlighted growing consumer demand for homes that are more energy efficient, cheaper to run and better prepared for the energy transition. The research found that 80% of UK adults see lower energy bills as one of the key benefits of improving their home's energy efficiency, while 55% cite upfront costs as the main barrier to taking action. More than half (52%) believe improving their home's energy efficiency would have a significant positive impact on their lives. 

By aligning mortgage affordability with the real world benefits of more energy efficient homes, Santander is demonstrating how  they can support both customer outcomes and sustainability ambitions. 

The innovation

A Zero Bills home combines the right specification of solar panels, battery storage and a heat pump, as defined by Octopus, to generate and manage its own energy. When connected to Octopus Energy's Zero Bills smart tariff, Octopus guarantees no home energy bills for at least 10 years. This helps households reduce monthly outgoings and protect themselves from energy price volatility.

Customer impact

The enhanced affordability assessment can increase borrowing capacity across a range of property sizes. Illustrative examples show that customers could access up to £29,000 additional borrowing compared with Santander's standard affordability assessment. 

The proposition directly addresses one of the key challenges identified in Santander's Tomorrow's Homes Report; while consumers see clear value in energy efficient homes, many struggle with the upfront affordability of accessing them. By recognising future energy savings today, Santander is helping customers overcome this barrier and access homes specifically designed to be cheaper to run and more energy efficient. 

Beyond the new build market, Santander and Octopus have also collaborated on a retrofit solution. Santander funded the upgrade of a four-bedroom family home to an Octopus Zero Bills home. This resulted in the family having no energy bills guaranteed by Octopus for at least 5 years and an EPC improvement from C to A. 

The case study, How a Family of 5 Reduced Their Energy Bills to Zero, demonstrates the tangible benefits that low-carbon technologies can deliver for customers, including lower household costs, improved energy performance and greater financial resilience. 

Why it matters

Transforming the UK's housing stock is critical to delivering a low carbon economy. However, one of the persistent challenges for consumers is that the financial value of future energy savings is rarely reflected in current purchasing power.

Santander's Zero Bills mortgage helps bridge this gap by incorporating lower running costs into mortgage affordability assessments, creating a tangible financial incentive for customers to choose highly energy efficient homes. In doing so, it supports greater adoption of homes built with low carbon technologies while helping customers benefit from reduced household expenditure from day one. 

The initiative also demonstrates how mortgage innovation can help unlock demand for energy efficient housing at scale. As Octopus Energy works towards its ambition of delivering 100,000 Zero Bills homes by 2030, Santander's affordability approach provides a practical example of how financial services can enable and accelerate the transition to more sustainable homes. 

Sustainable leadership

The Santander and Octopus Energy partnership represents a leading example of green finance innovation that combines customer benefit, commercial innovation and support for the UK's net zero transition.

Informed by Santander's Tomorrow's Homes Report, these new propositions aim to make sustainable homes more accessible while demonstrating the role financial institutions can play in supporting the transition to a lower-carbon housing sector.