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How Energy Efficiency Impacts Property Value

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In recent years, energy efficiency has become a popular topic. Homeowners across the UK are keen to reduce their carbon footprint – and keeping one eye on a house’s energy efficiency has become extremely common.

An Energy Performance Certificate (EPC) is a document that every homeowner pays for when the time arrives to sell a house. This certificate indicates how eco-friendly your house is – which can unsurprisingly have an impact on its value.

So, exactly how much effect does energy efficiency have on the price of a property? And what can be done to improve an EPC rating? Keep reading to find out.

Examples of energy-efficient features in the home

If your house has several energy-efficient features, it is likely to receive a far better EPC rating. Some common examples include insulation, solar panels, ‘Smart’ devices, energy-efficient lighting, and charging points for electric vehicles.

These features are generally less common in less affluent neighbourhoods because installation can often be expensive. However, for those who can afford it, features such as solar panels and electric vehicle charging points can differentiate a property from all others on the street – and, therefore, make it instantly more valuable.

How much do energy-efficient features cost to install?

Although installing energy-efficient features is costly, the theory is that you will make back the money on savings further down the line. The size of your property will make a major difference to the price, as will the company that you use to carry out the work. 

Double glazing for an entire house usually costs at least £1,000, and sometimes much more. 

Solar panels can cost around £500 per 250W panel, which can put your costs around £6,000 (and often much more) when getting these installed.

For an electric vehicle charging point, it will be around £1,000 for the installation of a standard 7kW home fast charger and then another £1,000 for the charger itself.

Some of the smaller energy-efficient features, such as ‘Smart’ meters and energy-efficient lightbulbs, are far less costly, with plenty of companies installing Smart meters free of charge.

If you want more guidance on the hidden costs of selling your house, click on the link.

How energy efficiency impacts property value

According to Nationwide, the energy efficiency of a property does indeed make a difference to the value of the house. 

There is around a 1.7% price difference between a house rated A or B on their EPC certificate, compared to a property with a D rating. For a house initially valued at £300,000, this would be a difference of £5,100. 

Meanwhile, properties with an F or G rating are around 3.5% less expensive than a house with a D rating. On a £300,000 property, this represents a price difference of £10,500. This price difference would be even more significant when compared to an A or B rating.

Often, the price differences listed above make installing eco-efficient features, such as double glazing or extra insulation, worthwhile. 

Why does energy efficiency increase a property’s value? 

With concerns about climate change and carbon emissions growing worldwide (particularly in the UK), it is unsurprising that people want to live in a house that is less harmful to the environment. For those who care deeply about reducing their carbon footprint, paying extra for an energy-efficient house is a price they’re willing to pay.

Energy efficiency can present real financial advantages, too. Solar panels can reduce your utility bills in the long term, as can double-glazed windows, therefore enabling you to recoup some (or potentially all) of your investment.

Other features, such as an electric vehicle charging point, can enable you to save money on petrol, as would be required with a non-electric car.

If a house already has energy-efficient features such as solar panels and electric charging points in place, then this saves the new owners from having to pay the costs associated with installation. These new owners can benefit from the cost savings that these features provide without forking out lots of money on installation.

Furthermore, the UK government has become increasingly strict about the EPC ratings required to rent out a property. From 2028 onwards, all houses being let out must have a rating of C or higher. Therefore, any property that fails to meet this standard cannot be used as an additional source of income (via renting it out) by the owners, making it intrinsically less valuable.

Does the government provide financial incentives to an energy-efficient property?

The UK government has been known to periodically introduce financial incentives for anyone installing energy-efficient features in their home. One example is the Boiler Upgrade Scheme, which covers much of the cost involved with updating your boiler. 

Meanwhile, the Energy Company Obligation (ECO) provides grants for energy efficiency measures such as cavity wall insulation and loft insulation.

A third example is the Sustainable Warmth Competition, which awards funding to local authorities to help them upgrade the energy-inefficient homes of low-income households in England.

You should try to stay up to date with any new eco legislation, as the UK government is constantly introducing new schemes to incentivise energy-efficient living. You may be able to contact experts in this area, who can advise you on any initiatives that you can take advantage of.

How do I find out how energy-efficient my property is? 

An Energy Performance Certificate (EPC) measures the energy efficiency of your property. This document is usually a requirement when the time arrives to sell your house on the open market.

An EPC is provided by a qualified expert who will carry out an inspection of your house and then present you with the findings. It usually costs around £50 to get completed, although it can be more depending on the size of your house and the expert you use. The certificate is usually valid for ten years.

Your EPC will outline where your house is energy efficient, as well as where improvements could be made. The final score (a letter between A and G) will indicate your energy efficiency. It may also come with recommendations for how energy efficiency could be improved.

Some people choose to make alterations to their property after receiving an EPC rating to make it more energy efficient. You may then choose to pay for another test to be completed to see if your rating has gone up.

For more information about EPCs, click here to read our ultimate guide to EPCs.

Do tenants care about the energy efficiency of a house?

Yes, potential tenants are likely to care about your property’s energy efficiency, too. If you have double-glazed windows or roof insulation, the house is likely to be warmer during the winter months, which may, therefore, reduce their heating bills.

Many people are concerned about their environmental impact, too, and may, therefore, feel better knowing that the house they are renting is eco-efficient.

Furthermore, from 2028 onwards, your EPC rating will impact your ability to let out your house to tenants. If it does meet at least a ‘C’ rating, you will not be allowed to rent the property.

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