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Energy efficiency can add up to £25k to the value of your home

Posted by Cathy Debenham on 26 June 2013 at 9:15 am

Improving the energy efficiency of your home can increase its value by up to £25,000 depending on where you live. New research for DECC (the department of energy and climate change) found that increasing the energy performance certificate (EPC) of an average home in England from band G to E, or from band D to B, could add more than £16,000 to the sale price of the property.

The most value is added in the north east, followed closely by the north west where energy saving improvements could add £23,000 to the value. Increases were much smaller (not statistically significant) in the south east, where prices are much higher.

My initial assumption was that the premium would be greater, because it was colder up north, but in fact it's greater in regions where house price levels are low. This is likely to be because broadly similar energy savings across regions have a different relative effect on house prices.

The researchers say: "House price is driven in the main by location, size and dwelling type. But price is also influenced by many other attributes that determine the condition and quality of the accommodation. Many of these attributes, such as double-glazing, modern space and water heating systems, improve energy efficiency and so it is not surprising that there is a positive relationship between price and the energy efficiency of a dwelling."

As expected, the price difference increases as EPC performance improves. The researchers estimate that, compared to dwellings rated EPC G, those rated EPC F and E sold for approximately 6% more on average. Properties rated D sold for 8% more with a10% hike for those rated EPC band C 14% for A/ B. When they drilled down to separate out different types of property there were notable differences in the increase value from energy efficiency. Terraced dwellings and flats saw bigger increases compared to detached and semi-detached dwellings. Click here to see this in infographic form.

The researchers found that nearly 93 per cent of dwellings sold are in EPC bands C, D and E, with nearly half in band D. Flats tend to get the highest ratings, with about half in EPC band C or B. Not surprisingly, the older the property, the more likely it is to have an EPC rating of E or worse.

The research was done by analysing like properties where the main difference was their EPC rating. It takes into account the price effects due to location, size and age of the property, but doesn't account for the condition of the property. More than 325,950 transactions on sales between 1995 and 2100 were analysed. 

Click here to download the full study.

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Comments

2 comments - read them below or add one

Cathy Debenham

Cathy DebenhamComment left on: 4 July 2013 at 9:44 am

Thank you for that story, G Reiss. It's always interesting to hear real experience as well as reading statistics.

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G Reiss

G ReissComment left on: 29 June 2013 at 4:41 pm

When we sold our house at the worst point of the property crisis in May 2008 I was thankful just to clinch a sale. At the time it was B rated, which was the best the estate agent had ever had up to that point. I'm not sure that its good energy efficiency rating added anything to its value, but I had a strong feeling it helped clinch the sale. It sent a message of good quality that would last in uncertain times.

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