Given the rising cost of energy, could spending extra on an energy-efficient house be the right move for you?
A 2013 study found that properties in the UK with an Energy Performance Certificate (EPC) grade of A or B sold for at least 14% more than comparable properties.
This study was the first extensive empirical study of its kind study on the impact of an EPC grade on a property’s value. But, ten years on, is this still the case?
Since that time, a lot has changed. Is it still accurate to state that your property’s EPC rating affects its value?
EPCs: Defined
An Energy Performance Certificate (EPC) is a certification that ranks the energy efficiency of your property on a scale from A to G, with A being the highest and most efficient.
An EPC is required whether you’re selling or renting a house since it’s crucial to know how much you may anticipate paying in energy costs.
How your EPC rating affects you
Recent statistics show that 71% of homebuyers give a home’s EPC rating significant weight when making decisions, with many admitting they would be willing to pay extra for a property with a high EPC rating.
Additionally, about 59% of purchasers are prepared to pay more for a home if at least 75% of the energy used there originates from renewable sources. This may not come as much of a surprise given the escalating cost of electricity.
Does your property’s value change if it has a higher EPC rating?
It is reasonable to assume that your property’s EPC rating may have an impact on its value, but does this still fit within the government’s previously stated 14% increase?
Over a five-year period, Knight Frank evaluated the EPC certifications of 30,000 homes with better energy performance, taking into account both pre- and post-improvements.
The national average for houses already at a F or G was anticipated to roughly double for properties moving from a band D to a C, costing around £5,500. This demonstrates the necessity for incentives to encourage these changes, which frequently take the shape of rising property values.
According to their calculations, raising your EPC might result in the following gains in your home’s value:
- Upgrading from a D to a C may add 3% in value above and beyond local property price increases, or about £9,000
- Your worth may rise by 8.8% (or almost £29,000) by moving two bands higher (for instance, from an E to a C)
- A 19.6% value increase (or an extra £64,400) might result from raising your EPC from a F or G to a C
Knight Frank’s research confirms that increasing your EPC does increase the value of your property, sometimes much more than the 2013 average. However, it’s crucial to act responsibly when doing so.
If you’re not aiming to sell right away, you might need to balance these renovations with up-front payments or take prospective repayment timeframes into account.