Green Services Direct

People are paying more attention to EPCs, Savills says

House hunters are willing to pay a premium for properties with heat pumps or other low-carbon technology, according to research by upmarket estate agent Savills (April 2023)

People are paying close attention to the energy efficiency of their homes as they look for ways to reduce spiralling energy bills. Nearly six out of 10 (59%) buyers are willing to pay more for a home mostly powered by renewable sources, the survey found.

“With energy bills and inflation dominating news headlines, it’s no surprise prospective home buyers are beginning to think about more than just the price of their next property,” said France McDonald, research analyst at Savills.

More than three-quarters (77%) of buyers said energy consumption of their next home had become more important to them. In the previous year, six in ten (59%) people surveyed said a home’s energy performance certificate (EPC) rating – which measures its energy performance – now played an important part in their decision making over whether to buy a property.

Energy Performance Certificates

EPCs are required whenever a property is built, bought or sold with certificates lasting 10 years. Properties are graded from A to G with the most energy-efficient homes getting the top A rating and the least a G. New-build homes tend to have high EPC grades, while older homes often have lower ratings of D or E. The average EPC rating for a home in the UK is D. Poor insulation and traditional boilers are commonly to blame for heat loss, according to the National Housing Federation.

The vast majority of homes still rely on fossil fuels for heating, hot water and cooking, contributing more than a fifth of the UK’s carbon emissions. Less than 2% of homes in England and Wales are completely or partially powered by renewable energy despite the government’s target to reach net-zero emissions by 2050, official figures show.

Amid the energy crisis, annual energy bills rose from £1,277 in January 2022 to £4,279 12 months later although government support means average costs for consumers remained at £2,500 a year until April 2023, according to figures from Ofgem, the energy regulator for Great Britain. As soaring fuel costs have squeezed household budgets, more householders are considering low-carbon alternatives to save on energy bills.

Heat pumps and solar panels

The research by Savills showed that while a fifth of people surveyed had investigated air source heat pumps and ground source heat pumps, only 4% and 2% respectively had installed them. Similarly, around a quarter had researched the installation of solar panels, but only 5% had undertaken the work.

The new technology can be expensive to install. “Buyers are beginning to think much more about energy-efficiency improvements, but easy fixes, such as low energy lighting or replacement boilers are more likely to have been either investigated or implemented as the cost is more manageable, payback is more immediate and the technology well-established,” said McDonald.

The property company found homes that run on cleaner and greener energy tend to command higher prices, according to an analysis of property sales between 2019 and 2021. “As more and more importance is placed on our homes’ energy performance, it’s not just going to be about a long-term saving on running costs, but future proofing its value,” said McDonald.

Mixed opinions

James Weldon, surveyor and RICs registered valuer at Chaffers Estate Agents in Dorset, broadly agrees with the Savills research. He said: “As the cost-of-living rises, people are looking at EPC ratings more.”

But he added: “I’m not sure that I would value a property higher for having a heat pump installed rather than standard gas central heating. I don’t think the technology is quite there yet in performing as well as people need it to.”  The surveyor said solar panels could boost the value of a home, especially if they were owned outright rather than leased from an energy company which can prove tricky.

Lenders are increasingly interested in EPC ratings because they see energy efficient properties as less risky purchases and more likely to hold their value in an era of combating climate change. “People can get better mortgage rates depending on how good the EPC rating is,” said Weldon.  Properties with EPC ratings of A or B are eligible for the cheaper deals. This type of ‘green mortgage’ is available to homebuyers and, in some cases, to re-mortgagers. 

Meanwhile Tim Kingsbury, director of Southsea-based Bushnell Porter estate agents, doesn’t believe energy efficiency is high on UK homebuyer checklists. Most of the properties on his books are period properties with lower EPC ratings.

 “The problem with Edwardian and Victorian properties is they can’t have cavity wall insulation like new-build homes because they were designed with solid walls. It’s difficult to retrofit older buildings.”  While you can bump up EPC ratings with a modern boiler, roof insulation and LED light bulbs, most older properties still won’t be upgraded from a D rating or below, to a C rating or above, said Kingsbury. The estate agent added he had never sold a property with a heat pump in 37 years in the business.

Energy efficiency, said Kingsbury, was still “low down” the checklist for most people looking to buy older character properties. Buyers concerned about energy efficiency tend to opt for ultra-energy efficient, new-build homes, he said.