HomeBusinessLeast eco-friendly homes pay £3,250 MORE in energy bills after price cap...

Least eco-friendly homes pay £3,250 MORE in energy bills after price cap rise


Those in homes with the poorest Energy Performance Certificate ratings will see average yearly energy bills rise by as much as £1,700 when the price cap rises this week, research suggests. 

A typical household living in a home with an EPC rating of G currently pays £3,207 per year in bills – but on 1 April that will increase £1,743 to an eye-watering £4,950, according to analysis by property consultancy JLL.

A home’s EPC rating is largely based on how it is heated and its level of insulation, meaning the majority of G-rated homes will be older or period properties. 

Bigger bills: From 1 April, 22million households will pay more for their energy bills as the price cap rises – but how much will depend in part on the energy efficiency of their home

Meanwhile, homes in EPC bands A to C – the most energy efficient – will see their bills rise £600 on average, going from £1,104 to £1,704. Homes with better EPC ratings tend to be newer builds. 

This means that those in the least energy efficient properties could end up spending a huge £3,250 more on their bills every year, or £270 more each month. 

The energy price cap set by Ofgem is increasing by 54 per cent due to the rocketing wholesale cost of natural gas, which makes it more expensive for energy companies to supply households.

Those that are not on fixed gas and electricity deals, about 22million customers, will face rises of hundreds or even thousands of pounds per year.

The median energy efficiency score for all homes in 66 in England and 64 in Wales, which is equivalent to a band D. This is according to the latest ONS data from 2021.

JLL’s analysis, which is based on Office for National Statistics data, found that those in band D will see their energy bills breach the £2,000 mark after 1 April.

The average annual cost will go up from £1,335 to £2,061; a £726 rise.

Price hike: Those living in older properties with poorer EPC ratings are set to pay hundreds - or even thousands - more in energy costs each year than those in greener homes

Price hike: Those living in older properties with poorer EPC ratings are set to pay hundreds – or even thousands – more in energy costs each year than those in greener homes

People living in band E homes are set to see their bill rise £946, from £1,741 to £2,687, after the price cap goes up, while the cost of energy in the average band F property will rise £1,263, from £2,324 to £3,587.

As well as how energy efficient a property is, its size and the way in which its inhabitants use electricity and gas also have a bearing on bills.  

Additions that might improve a home’s EPC rating include fitting double-glazed windows, replacing a gas boiler with a low-carbon alternative or adding insulation to the walls or roof.  

According to Ofgem, the average annual capped bill for those on default tariffs paying by direct debit will increase by £693 from £1,277 to £1,971 per year after 1 April.

Those on prepayment meters will be hit with an increase of £708 from £1,309 to £2,017.

However, the advice for the majority of homeowners is still to remain on their suppliers’ default tariff once an existing fixed deal ends.

Default or variable tariffs used to be more expensive, but the fact that they are protected by the price cap means they are now better value than fixed deals, which suppliers have hiked up beyond the price cap limits.

Price rises could push people into newer homes

JLL said that the astronomical rises in the price of energy could mean more Britons choose an energy-efficient new-build the next time they move home.

In 2021, 84 per cent of new build homes achieved an A or B EPC rating, compared with just 4 per cent of existing properties.

The new homes industry can tap into demand from households who not only want to do their best for the climate, but also save themselves money too

Marcus Dixon of property firm JLL  

Marcus Dixon, director of UK residential research at JLL, said: ‘Increasing the energy price cap on 1 April could see bills for the average band G home hit almost £5,000 a year, up £145 per month on current rates.

‘More efficient homes don’t escape the price rises either, albeit those paying energy bills for homes in bands A to C will be on average £3,246 a year better off than their neighbours in a band G home.

‘There is an opportunity here for the new homes industry, offering best in class efficiency and tapping into demand from households who not only want to do their best for the climate, but also save themselves money too.’

JLL’s report said that renovating an older property to make it more energy efficient was much more expensive than adding the same features to a new-build property during its construction. 

This, it said, was ‘even after the VAT rate on installing energy efficiency measures was cut in the Spring statement from 5 per cent to 0 per cent.’

Priority: Home Buyers Federation data suggests 'having a good EPC rating' is increasingly important to homeowners - as it can help to bring down their electricity and gas bills

Priority: Home Buyers Federation data suggests ‘having a good EPC rating’ is increasingly important to homeowners – as it can help to bring down their electricity and gas bills

JLL cited figures from the Government’s Climate Change Committee which suggested that making a new-build home ‘highly’ energy efficient added an additional £5,000 to the build cost. 

In contrast, the bill for retrofitting an existing home would be almost five times more at £23,000. 

New research by the Homes Builders Federation has also suggested that home buyers are more interested than ever in having an energy efficient property.

In a survey it found that 3 in 4 people were worried about their home’s energy performance, while 1 in 4 said energy efficiency would be a crucial factor in their next home move.

Being ‘eco-friendly’ and ‘having a good EPC rating’ were the second and third most desirable features in a new home, behind outdoor space.

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