As everyone in the industry will now know, the government have set some ambitious targets in regard to carbon emissions for new builds for the coming years. Given that 15% of the country’s total emissions come from residential properties – it isn’t difficult to see why.
There has been an increased focus on the energy efficiency of new build homes in recent years as awareness of the climate crisis grows by the day. Buyers are not only looking to save money on their utility bills but also feel a sense of responsibility to live in the most sustainable manner possible. So, does this increase in awareness lead directly to a price premium for homes with a good EPC rating? Well, the short answer, it would seem, is yes.
Recent research carried out by Nationwide suggests that the EPC rating of a home can influence the price. Their findings showed that buyers can expect to pay a 1.7% premium on homes with an EPC rating of A or B and can also expect to see a 3.5% discount on homes with an F or G rating.
Although this is currently a relatively modest impact, it would be reasonable to assume that this correlation will only grow stronger with time. As EPC restrictions become tougher and the climate crisis reaches an even more critical level, energy efficiency will push its way to the front of buyers’ minds – especially if the government introduce further incentives to increase energy efficiency in order to meet the climate change obligations in place for the UK.
Over the last decade, the country as a whole has made huge strides to improve the energy efficiency in residential properties, which has been aided massively by the higher energy rating of new build properties alongside the improvements made to existing homes such as loft and cavity wall insulation. Although 94% of new build properties are EPC rated C or higher, it’s important to note that the initial construction creates a significant carbon footprint.
With this trend of energy efficient homes being sold for a premium only expected to grow stronger, perhaps those in the new build market will take heed of the fact that those rated A or B can command a higher price than that of a C rated property.
As this correlation becomes more significant, it may well be in the best interests of house builders and lenders that as many new build homes as possible exceed requirements and reach a rating of B or higher, to not only improve emissions, but to also offer the opportunity of a higher selling price.
