Energy saving measures boost house prices
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Making energy saving improvements to your property could increase its value by 14 per cent on average
Making energy saving improvements to your property could increase its value by 14 per cent on average - and up to 38 per cent in some parts of England - new research released today by the Department of Energy and Climate Change (DECC) reveals.
For an average home in the country, improving its EPC (Energy Performance Certificate) from band G to E, or from band D to B, could mean adding more than £16,000 to the sale price of the property. In the North East, improved energy efficiency from band G to E could increase this value by over £25,000 and the average home in the North West could see £23,000 added to its value.
The report, which took into account over 300,000 property sales in England between 1995 and 2011, is the most comprehensive research in this area to date. It indicates that energy efficiency is now a key factor influencing the sale price of most residential dwellings in England.
Energy and Climate Change Minister Greg Barker said:
“We have long known the benefits of making energy saving improvements to the home, but this study is real evidence of the huge potential rewards. Not only can energy efficient improvements help protect you against rising energy prices, but they can also add real value to your property. This Coalition is committed to helping hardworking families with the cost of living. The Green Deal is designed to do exactly that.
“The Green Deal is helping more people make these types of home improvements, reducing high upfront costs and letting people pay for some the cost through the savings on their bills. The Green Deal is a great option for anyone wanting to improve the look, feel and potentially the value of their home.”
Kevin McCloud, broadcaster and co-founder of the Grand Designs Future Living home retrofit company, said:
“There are some 26 million homes in Britain, most of them about as well insulated as a rabbit hutch, and they need immediate help to be made less wasteful. This timely report tells us what we suspected all along: that people really value the well-insulated, energy-efficient home; that modest investment in measures to make our homes more comfortable, healthier and cheaper-to-run really pays off.
“The Green Deal is now maturing into a helpful way of financing a lot of the retrofit solutions around. Homeowners can now start to make these changes, alleviate the burden of high energy bills and improve the value of their prime asset.”
Nearly half (46 per cent) of properties in England are currently band D – but compared to this, a typical home in the West Midlands in band B is estimated to be valued at nearly £17,000 more. In the North East this could be over £19,000, £3,000 more than the national average.
James Brooks from Brooks Estate Agents said:
“For the majority of the UK we are seeing that there is a new factor dictating a home’s saleability. With fuel bills continuing to rise, buyers are becoming more and more conscious about the energy efficiency of their prospective new homes and are willing to invest more in a property now if they know it will cost them less to run in the future.
“As such, we always try to advise our customers to consider the real S.A.L.E. value – Size, Aesthetics, Location and Efficiency – when buying or selling.”
The Green Deal, the Coalition Government’s flagship energy efficiency initiative to transform the homes of Britain can help people capitalise on these findings. The Green Deal helps households pay for some of the cost of making energy-saving improvements, with the repayments spread out over time and paid back through the electricity bill.
Energy Rating and Dwelling Prices: Potential £ value increase
£ value increase from properties moving from EPC D to B & EPC G to E*
|EPC D to B||EPC G to E|
|Yorkshire & Humberside||£15,945||£17,298|
|East of England||n/a1||n/a1|
1 = Result is not statistically significant at the regional level; all other results are significant to between 95% and 99.9% confidence levels (see the report for a breakdown of these results).
* = Reported prices calculated using average sale prices in each region, then applying the report’s price premiums compared to EPC Band G properties.
Energy Rating and Dwelling Prices: Potential % value increase
value increase based on properties moving from EPC G
|EPC A/B||EPC C||EPC D||EPC E||EPC F|
|Yorkshire & Humberside||24%||16%||14%||12%||9%|
|East of England||7%||5%||n/a2||n/a2||4%|
2 = Result is not statistically significant at the regional level; all other results are significant to between 95% and 99.9% confidence levels (see the report for a breakdown of these results).
Notes to editors:
The above results are based on analysis of like properties where the main difference is their EPC rating. It takes into account the price effects due to location, size and age of the property; it does not account for the condition of the property, however. It does not forecast potential future sale values of properties from 2013 onwards.
This is the first large-scale empirical study of the effect of energy labelling on residential property prices in England. Details of transactions involving over 325,950 dwellings that took place from 1995 to 2011 were analysed. There is no information on home improvements between two sales transactions which may affect the estimated price effects reported in the above tables.
Sale value increases are not reflected as strongly in all areas of the country such as the South East. This is possibly the result of energy saving being a smaller proportion of properties’ overall value, and commuting patterns masking energy efficiency’s role on property prices.
“An Investigation of the Effect of EPC Ratings on House Prices” is a report for the Department of Energy and Climate Change by Franz Fuerst, University of Cambridge; Pat McAllister, University of College London; Anupam Nanda, University of Reading; and Peter Wyatt, University of Reading. The report has not yet undergone full peer review.
Energy Performance Certificates (EPCs) provide buyers with an insight into a property’s energy efficiency. The document is valid for 10 years and grades a property’s energy efficiency from grade A to G, with A being the most energy efficient and G being the least efficient.
Free and impartial advice about the Green Deal is available by calling the Energy Saving Advice Service (England, Scotland and Wales) on 0300 123 1234 or visit www.gov.uk/greendeal
Grand Designs Future Living - GDFL - brings together the Grand Designs team and Mark Group, the energy saving installation experts. GDFL will help you understand your home’s energy efficiency potential, provide solutions which use the latest technologies and then fully install the measures you choose. Grand Designs Future Living is about creating an energy saving solution that respects your home, its setting and its community.