As many as 15 million homes in England and Wales could need energy efficiency improvements to meet the proposed target of an EPC ‘C’ rating by 2035, according to new data.
With around 25 million properties in England and Wales, this means 60 per cent of the total housing stock might require work to be carried out.
The data is from Halifax and is based on the properties it lends mortgages on.
EPC is a rating scheme which bands properties between A and G, with an A rating being the most energy efficient and G the least efficient.
Improvements needed? Just one in ten homes built before the 1930s achieves an EPC rating of C or above, according to Halifax’s analysis
In line with its ambition to reach net zero carbon emissions by 2050, the Government is considering introducing EPC regulations that could effectively force millions of homeowners to make improvements to their properties.
If they didn’t, their homes could lose value or be harder to sell.
At present a bill is making its way through parliament which if enacted would require all owner-occupied properties to achieve an EPC of at least C by 2035.
The bill states that exemptions would be possible where it was not ‘practical, cost-effective or affordable’ for the works to be carried out, though the exact meaning of this is not clear.
Although the bill has a long way to go before becoming law and could be amended or rejected, this will likely be of concern to many homeowners, particularly those living in detached or period properties.
Just one in ten homes built before the 1930s has an EPC rating of C of more, according to Halifax’s analysis.
|Scores||Pre 1900||1900 – 1929||1930 – 1982||1983 – 2011||2012 onwards|
|Estimated EPC rating||E||D||D||C||B|
|Region||Pre 1900||1900 – 1929||1930 – 1982||1983 – 2011||2012 onwards||All|
The average rating for all homes in England and Wales is D. However, for the 4.2 million homes built before 1900, the average EPC rating is only E.
In order to improve a property’s EPC rating, an owner will need to make improvements to make it more energy efficient.
Ensuring adequate loft, underfloor or cavity wall insulation, upgrading to double glazed windows, draught proofing, hot water tank insulation and air or ground source heat pumps are just some examples of improvements that can boost an EPC rating.
Successive lockdowns prompted a ‘race for space’ amongst home movers, with detached homes becoming highly sought after during that time.
Detached house prices rose 15.3 per cent in 2021 alone, according to the latest ONS data, whilst flats rose by just 5.7 per cent.
It is estimated that a quarter of heat loss from poorly insulated homes is through roofs, a third through external walls, a quarter through doors and windows, and the rest through floors
However, the wider cost implications of owning a detached home may already be beginning to bite homeowners.
It is these homeowners who now face some of the biggest energy cost increases following the fuel cap rise as well as the most work to make their homes more energy efficient.
Flats are the only type of home that on average achieve an EPC rating of at least C, whereas less than one in five of existing detached homes currently have a C rating or higher.
Further fuel price increases are going to mean we’re spending more to live in colder homes unless we act
It is estimated that around a quarter of heat loss from poorly insulated homes is through roofs, a third through external walls, another quarter through doors and windows, and the rest through floors.
Andrew Asaam, mortgages director at Halifax, said: ‘The 50 per cent increase in the fuel cost cap is going to have an impact on everyone’s energy bills, in all but the most modern homes, that impact is going to be significantly more.
‘The majority of our homes fall short of the average C rating the Government aspires to, which means we’re wasting money and harming the environment heating our homes.
‘Further fuel price increases are only going to mean we’re spending more to live in colder homes unless we act.’
How much will energy efficiency improvements cost?
Whilst the proposed EPC changes may be well intentioned, the costs involved in retrofitting the UK’s ageing housing stock should not be underestimated.
The latest English Housing Survey suggested that the average cost of bringing a property with an EPC D up to a C would be £6,472.
Improving an E to a C would cost an estimated £13,285, while upgrading a property with an F or G to a C rating was estimated to cost £18,858.
It’s estimated that moving up one EPC rating band could save around £250 per year on average in bills, which means the payback for any improvements could take decades.
If homeowners are eventually required to retrofit their properties in order to reach a C rating, it is plausible that buyers may begin to shun poorly-rated homes in favour of those with a rating between C and A.
Liana Loporto-Browne, president of estate agent body NAEA Propertymark said: ‘We are yet to see a dramatic increase in demand for energy efficient homes, but with the proposed minimum EPC rating increases on the horizon, and products such as green mortgages being discussed, we could see a change in trends.’
This could mean the value of people’s homes may be at stake. There is already evidence of an ‘energy rating price gap’ beginning to appear, according to Halifax.
The ‘Green home premium’ is worth up to £40,000 when comparing an A-rated home to one at G, according to the lender.
Even moving from your home from a D rating to a C rating will typically boost the price by around 2 per cent – the equivalent of £5,214 on average.
|Change in EPC rating||Typical % uplift||Average £ uplift|
|F to E||2.9%||£7,584|
|E to D||2.4%||£6,162|
|D to C||2%||£5,214|
|C to B||2%||£5,214|
|B to A||1.8%||£4,740|
Estate agents are divided on the topic of whether the energy efficiency of a property will soon be at the forefront of every buyer’s mind.
According to Cory Askew, head of sales at London-based Chestertons estate agents: ‘We are witnessing a number of homeowners as well as investors who are already improving their homes’ EPC ratings because of the positive effect this can have on the resale value.
‘If a property does not meet certain eco credentials, buyers could have the upper hand in price negotiations; a scenario most sellers want to prevent.
‘Looking ahead, we do expect a growing number of property owners to prioritise their property’s EPC ratings; especially in the face of increasing energy bills and society’s commitment to better its carbon footprint.’
But David Reed, operations director of Richmond estate agency Antony Roberts believes that although soaring energy prices may increase the importance of energy efficiency in properties, it is unlikely to have a major impact on values.
‘Buyers will increasingly bear the EPC rating in mind and this will no doubt come into the reckoning more when assessing a property’s attributes and value,’ he says.
‘By how much for now remains unsure, and may be magnified in times of higher energy costs, but I doubt it will be the major factor.’
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