Potential buyers are showing a greater interest in homes with high energy efficiency ratings.

Energy efficient homes are outperforming other properties in the current housing market.

Six out of 10 estate agents say homes with high energy efficiency ratings are holding their value despite the overall market slowdown, according to the Royal Institution of Chartered Surveyors.

At the same time, 40% said they are seeing more interest from potential buyers in energy efficient homes.

And 41% said sellers are attaching a price premium to their home if it has a high energy efficiency rating.

Mairead Carroll, senior specialist in land and property standards at RICS, said:

“It will be fascinating to see how important energy efficiency becomes to buyers over the next 12 months.”

The survey reflects our own findings that buyers are becoming more value-conscious due to higher mortgage rates, inflation and the cost-of-living squeeze.

Buyers are factoring energy costs into moving decisions

The average household has seen its gas and electricity bill double from £1,277 per year at the start of 2022 to £2,500 now.

The government’s Energy Price Guarantee has kept bills lower than they might otherwise be. It limits the amount suppliers can charge per unit of gas or electricity.

But the guarantee will change in April and the average annual bill for gas and electricity is expected jump to around £3,000.

These rising costs have led to home buyers increasingly factoring in the cost of heating a home to their moving decisions.

Mortgage lenders are looking at potential energy costs too

The growing appeal of energy efficient homes isn’t just because buyers want to save money on their bills.

Banks and building societies are also factoring in energy costs when assessing whether people can afford a mortgage.

If a lender thinks your budget is too tight to cope with further increases to energy costs, they may only be prepared to lend you a lower amount.

First-time buyers and those on lower incomes are most likely to be impacted.

On the other hand, if you can show lenders that your home has a high energy efficiency rating – and so it costs less to run and heat – they’re less likely to be concerned about your impact to manage future gas and electricity price rises.

Properties are given an Energy Performance Certificate (EPC) which rates their energy efficiency on a scale from A to G.

Find out your EPC rating – GOV.UK

A is the most efficient EPC rating and G is the least efficient. If you’re selling or renting a property, it’s a legal requirement to have an up-to-date EPC rating.

While 80% of new-build homes have an EPC rating of A or B, only 3% of older properties have a rating this high.

How can I make my home more energy efficient?

There are a number of steps you can take to make your property more energy efficient.

Insulating your loft will prevent up to 25% of heating being lost through the roof, while installing cavity wall insulation will help to stop 35% of heat being lost.

Installing double or triple glazed windows or replacing an old boiler with a new energy efficient one will also make your home cheaper to run.

On a smaller scale, using energy efficient light bulbs and sealing any gaps letting in draughts in your home will also have an impact.

Financial support to make your home more energy efficient

There are a number of schemes to help you carry out energy efficiency home improvements.

If you’re claiming certain benefits, energy companies have an obligation to help you under the Energy Company Obligation scheme.

The scheme will pay for loft or cavity wall insulation (as long as it’s suitable for your home), double glazing, and even a new boiler if your current one has broken.

Energy Company Obligation scheme – Ofgem

If you own a home in England or Wales, the Boiler Upgrade Scheme can give you £5,000 towards the cost of an air source heat pump or biomass boiler.

Or you can get  £6,000 towards the cost of a ground source heat pump.

Boiler Upgrade Scheme – GOV.UK

Another option is the Green Homes Grant Local Authority Delivery Scheme.

Grants averaging £10,000 are available to homeowners to install solar PVs, air source heat pumps, and loft, underfloor, external wall and cavity wall insulation.

To qualify, you must have a household income of less than £30,000 a year and your home must have an EPC rating of D, E, F or G.

You can apply through your local council.

Green Homes Grant – GOV.UK

The government also recently launched the Green Home Finance Accelerator scheme.

Under this scheme, £20 million is being made available to lenders to fund affordable loans for homeowners carrying out energy efficient improvements.

Green Home Finance Accelerator scheme – GOV.UK

Key takeaways

  • Energy efficient homes are outperforming other properties during the current challenging market conditions
  • Six out of 10 estate agents said homes with high energy-efficiency ratings were holding their value
  • Four out of 10 said they were seeing more interest in energy efficient homes from potential buyers