Rightmove’s Green Homes Report confirms what many in the industry already suspected about the appeal of energy-efficient housing for both homeowners and investors.
There’s a distinct positive correlation between new-build homes and their energy efficiency ratings. Now, Rightmove has drawn a link between energy performance certificate ratings (EPCs) and both the price of and demand for the property.
Its new Green Homes Report has revealed that the time it takes between a property being listed and it being marked as SSC [sold subject to contract] is fastest for homes with the highest ratings.
Properties listed with an EPC rating of B – the second highest score – were sold in an average of 30 days. By contrast, those scoring a grade G in their EPCs – the lowest score – took an average of 37 days to sell.
What’s more, the property portal found that homes with an EPC rating of C could achieve an additional 16% in value compared with a property with an F rating. This was based on 200,000 homes that were listed for sale and were then relisted with the higher rating.
Weighing up green homes
Even where the green credentials of property are not yet directly influencing the outcome of the transaction, there is certainly much more interest in energy efficiency in homes than there ever was.
Rightmove, which is one of the country’s most-used property portals, reported that there are now 73% more green features in property listings than there were in 2020.
While most buyers are motivated by things such as location and space, around one in 10 people currently looking to move cited finding a more green home as their top motivation, said the report.
For 89% of homeowners, saving money on energy bills is the biggest driver for making improvements to their property. A further 55% want to improve insulation – presumably for warmth – while 49% want to improve their carbon footprint.
Furthermore, 41% of property owners would increase their green credentials to add value to their property, while 28% would do it in order to help sell their home in the future, as people increasingly recognise the value of sustainability.
Barriers for improvement
Those who own older properties, whether owner-occupiers or landlords letting them out, are increasingly having to face up to the changing conversation around energy efficiency in homes.
According to Andy Sutton, co-founder of SERO, there are many improvements out there that can create green homes but not all are suitable for every property.
“Every home is different and while a heat pump will be suitable in most situations, there may well need to be some fabric improvements first,” he said.
“The first step is a proper assessment and plan to see whether these are needed too. However, the carbon benefits of heat pumps are huge, especially as we continue towards the grid decarbonising
“It’s quite remarkable that ten years ago gas was the greenest major energy source, and now it’s electric.”
Character properties present arguably the biggest challenge. It can be difficult to make changes on some such homes, for example upgrading windows, and some of the charm that attracts people can be lost in the process.
Kate Eales, head of regional estate agency at Strutt & Parker, said: “Where poor broadband became a common deal-breaker in recent years, good sustainability credentials are rising up the consideration list, especially in the face of rising energy prices.
“That said, houses are ultimately homes and character continues to hold huge value for many. What remains to be seen is how affordable and straightforward sustainable changes to period properties will become in the longer term, as this will ultimately help preserve the value of historic homes.
“If buying a home was purely a financial decision, a house with a strong EPC would be top of the list.
“But a purchase of a period home is often driven by the heart, and not just the head. EPCs create more transparency so buyers know what’s what when they become the custodian of an older home.”
A big job for landlords
The report points out that, as of May 2022, more than half (56%) of rental properties listed on Rightmove had an EPC rating below C. If government proposals to make C the minimum legal renting come into play, this poses a problem.
Rightmove’s survey found that 25% of landlords don’t know the EPC rating of their rental properties, while 35% don’t know about the proposals to change the minimum energy efficiency standards (MEES).
For those that need to make improvements, around a third (34%) said they would do so before 2025, while 13% said they would do this after 2025 and 25% aren’t sure what to do.
A fifth said they would sell their properties due to the cost of improvements outweighing the return on investment.
Whether these landlords will then reinvest in new-build or more modern green homes is uncertain, but there is already evidence that some investors are changing their preferences with an eye to future requirements.
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