Homebuyer & sellers' guide to reading an EPC: part 2
Posted by Linn Rafferty on 25 November 2011 at 10:30 am
Energy performance certificate (EPC) gives information that can be very helpful to both homebuyers and homesellers, but only if you know what to do with it. This article should be read in conjunction with previous guides to reading page one of the EPC for the buyers and renters, and for sellers. I will cover for rental properties a future blog.
The rest of the EPC contains two particularly important areas: firstly, the home’s current features, and secondly, recommendations for improving the home.
The current features
This is a table that lists the most significant energy-related features of the property, and gives them a star rating. 1 star means the energy performance of the feature is poor, and 5 stars means excellent.
The star ratings are based on the energy efficiency of the particular feature, ie how much does this part of my home affect my fuel bills? It is therefore a rating based on cost, and it compares the systems or constructions in your home with those typically found in other homes.
If a feature is given a poor rating in this table, this does not mean that the system is of poor quality, poorly manufactured or poorly installed – just that it is less efficient than other systems or constructions that are generally used in homes. Where a home was built many years ago, the construction methods and installed systems were not as energy efficient as those now commonly available.
Unsurprisingly, this table often shows lower star ratings for some features of older homes, such as the wall or roof construction.
Another reason for lower star ratings can be that the installed system uses an expensive fuel. For example, a hot water or heating system using electricity will rate lower than a system that uses mains gas, due to the higher cost of electricity.
For some features, the rating will state that it is assumed. This does not mean that the domestic energy advisor (DEA) has made an assumption. The DEA is not allowed to drill into walls or lift floorboards, so some features have to be assessed by assuming that they are typical of standards that applied when the home was built. Floors are a good example of this, and the software assumes that they perform to the typical insulation standards of their day, unless the DEA has been shown evidence that improvement work has been carried out.
The recommendations on an EPC are presented in two ways – firstly as a table, followed by a description of each recommendation. This gives more information about each energy efficiency measure that has been recommended, and explains in general terms how it would improve the energy efficiency of the home.
The table of recommendations is quite complex and some explanation may help. The four columns, in turn, list the recommendation, the likely costs saving it would make in this home, the energy efficiency rating after improvement, and the environmental impact rating after improvement. The first recommendations are the most cost effective, and they are identified as lower cost measures. These are the ones you will want to implement as soon as possible in any programme of improvement work on this home.
The higher cost measures and further measures will be less cost effective, but as the price of energy increases, and some energy efficiency measures become cheaper to install, this balance is changing. The likely cost savings will give you a good feel for whether the result on your energy bills will be worth it. However, you should bear in mind that these are typical savings, so you may achieve greater or lesser savings depending on how you use your home.
You should also consider that these cost estimates are based on fuel costs at the time the EPC was produced. Since EPCs are valid for 10 years, these estimates will always be based on fuel prices that are lower than today’s charges – so the tendency is for higher savings to be available. Finally, the savings don’t include any payments you could receive via the Government’s feed-in tariff or renewable heat incentive schemes.
What should I do with the Energy Performance Certificate?
Well, of course, this depends on whether you are selling or buying.
If you are selling
You may think that because you are moving out, there isn’t much point in taking much notice of the EPC you’ve paid for. It’s often said that buyers don’t consider the EPC very much when choosing a home. But, with energy prices on an upward spiral, this is changing. Valuation surveyors are also now being encouraged to take energy performance into account when valuing homes. Since sellers rely on buyers having access to mortgages, the possibility of improving a property’s valuation in this way may become more important to sellers in the future.
So the EPC is relevant, and you could consider making some basic improvements recommended on the EPC prior to moving, so that you can show prospective purchasers that you have made the home cheaper to run. The fact that you have taken steps to reduce the home’s environmental impact may also be important to some buyers.
If your DEA is accredited with the NHER scheme (ask them) then they can provide you with a professional report about your home’s energy performance to supplement the official EPC. This report explains more about the EPC, with special reference to your home’s particular features, and can be used as part of the marketing material. If your agent doesn’t know how to use your home’s good energy performance to market your home, encourage them to use this report to do just that.
If you are buying
Firstly, and this is most important, don’t accept the Agent’s advice to put it away with the rest of the paperwork without first reading it carefully!
Remember the Agent is appointed to work for the seller, to get the best price for their property, so there’s no particular reason why they should give you the best advice on what sort of home will suit you. If you received the EPC before you decided to buy this home, take a look at the rating before you make your final decision, and think hard about how affordable it will be as energy prices rise.
That’s not to say that a low rating should put you off buying – you will want to balance this with the positive features that attracted you to this home in the first place. However, as I explained in my previous blog, if the energy efficiency rating is low (say, E, F or G) and the potential for improvement is also low (say, an improvement of no more than 10 SAP points) and you want to be warm at reasonable cost, then this home is probably not for you.
So, if you are thinking of buying a home with a low energy efficiency rating, the next thing is to take a look at the recommendations. If the rating can be improved cheaply, by acting on the lower cost measures, then that’s good; depending on the time of year, you may even be able to improve the home quickly and cheaply, before the winter sets in.
Unfortunately, not all homes can be improved without spending a LOT of money. If significant improvement in the rating requires you to act on the further measures, like solid wall insulation and double glazing, you will be looking at upwards of £10,000 to achieve a warmer home.
Recognising the difference between a home that can be cheaply improved, and one that will need this sort of money spending on it, is possibly the most important skill that the DEA has - and one that could save you from being too cold for comfort in your new home.
About the author: @linniR is a consultant, a freelance writer and a Domestic Energy Assessor accredited with the NHER scheme, and she enjoys all three. She tweets regularly on issues relating to energy efficiency and renewables and provides consultancy, especially in relation to training needs.
If you have a question about anything in the above blog, please ask it in the comments section below.
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