Energy efficient homes are better. They are better for the environment, which is an increasingly important consideration for many people and they are better for the homeowners’ pockets which has always been an important consideration and always will be. So it stands to reason then that a highly efficient property, fitted with lots of energy saving or generating technology will fetch a better price than an old, inefficient property doesn’t it?
Unfortunately, the housing market, as is often the case, has so far been slow to react. The doubters will tell you it’s just a fad, that solar panels look ugly and people don’t want the hassle of feeding a biomass boiler, and anyway after the FIT and RHI schemes end there’ll be no real financial incentive. Presumably these are the same people who said central heating would never take off! Fortunately, it seems the market is starting to catch on, as evidenced by a recent Royal Institute of Chartered Surveyors (RICS) statement.
The RICS Statement on Sustainability
The Royal Institute of Chartered Surveyors, the governing body of residential property valuers in the UK, recently issued a paper to its members entitled “Sustainability and Residential Property Information”. In it, it recommends that its members take into account a property’s energy efficiency when preparing a valuation. The paper states “With the increased emphasis on green living and energy efficiency, it is highly possible that the market will need to adapt. This new information paper offers advice to our members, recommending that they are fully aware of sustainability policy and the characteristics of individual buildings when valuing property”
The paper also says that valuers ought to be aware of and take into account legislative factors. This would include for example the feed in tariff and renewable heat incentive and whether a property is currently receiving these payments.
The Effect of the RICS Statement
This statement by RICS is great news for the industry and for people who already have highly efficient homes. Once it filters through to the individual valuers it should lead to improved valuations of efficient homes. Gordon Miller of Sustain Worldwide claims energy efficient homes will increase in value much more quickly than their inefficient counterparts and will hold their value better.
By factoring energy efficiency into their valuations, surveyors will give the public the confidence to invest in improvements or to pay a premium for properties which already have improvements installed. It is good news too for the Government ahead of the launch of the Green Deal next autumn.
It is generally simpler and cheaper to install many energy saving/generating measures while building a new property than to retrofit an existing home. As the effect on value becomes more pronounced therefore this may well stimulate the building of new, super-efficient homes. This could lead to a loss in value of older, hard to treat properties.
Which Energy Efficiency Measures Will Have the Biggest Impact on Value?
A home’s energy rating, as detailed in the Energy Performance Certificate, should have a major impact. It is the energy saving measures, such as insulation, which have the biggest effect on this rating so these will be important, however they are rarely considered “extras” and it is the idea of getting something extra that tends to get people to pay more.
Solar panels, on the right property, improve the aesthetics of the building, save money on bills and allow the owner to claim payments through the feed in tariff so they are sure to be a big winner and to rate highly with valuers. They are hassle free once fitted so people are likely to prefer to buy a property with them already installed than to retrofit.
Ground source heat pumps and air source heat pumps have similar advantages and again, are likely to prove popular, particularly when coupled with underfloor heating. Wind turbines are unattractive to most people as well as requiring maintenance and are likely to prove less popular as are biomass boilers. The environmental advantages of biomass have yet to be conclusively proved and as the fuel still needs to purchased consumers are at the mercy of market forces. As oil and gas supplies dwindle, biomass prices will surely rise. Add to this the hassle of having to load the burner and order the fuel and biomass begins to look fairly unattractive.
In 2018 it will be illegal to market any property with an energy performance certification of F or G so energy efficient improvements to domestic and commercial properties will have to be made by then or landlords and letting agents will have a host of unmarketable properties.