Energy performance certificates (EPC) make little difference to property sales and the Government should consider replacing them with more effective green tools, agents claim.
Analysis by Propertymark has called into question how much of a difference EPCs make when marketing a home and their usefulness in helping homeowners make their property more energy efficient
New research from the agency trade body reviews the influence of EPCs on the decisions of homebuyers based on member feedback.
Almost three quarters of agent members said buyers sometimes show an interest in EPCs but 15% reported that they never show an interest.
This is an improvement on its 2018 survey, in which 35% of sales agents reported that homebuyers never show an interest in the EPC.
Almost half of residential sales agent members reported that EPCs never influence the offer homebuyers make on a property, while only 1% reported that it always has an impact.
This picture has still improved since 2018 when 71% of respondents reported that EPCs never influence the offer homebuyers make.
Agents were also asked if, in their experience, high EPC ratings influence property prices. Most said this was not the case while 66% said they did not believe energy efficiency measures help boost a property’s value.
The trade body acknowledged that this contradicts other industry research, adding:”the vast majority of these studies use market data to analyse the impact of EPCs on price and have not asked the agents who set or negotiate the price directly.”
To address this, Propertymark has suggested replacing EPCs with a Property Passport or Net Zero Performance Certificates (NZPCs) as proposed in the Independent Review of Net Zero.
It said: “EPCs are criticised for the manner in which they account for the cost of energy when determining property performance, which can result in misleading scores when transitioning to more expensive but greener energy sources like heat pumps.
“NZPCs, which provide detailed information about heating technology and its financial and social effects, would be a better alternative.”
It suggests more financial incentives are required to promote energy efficiency such as vouchers to cover the costs of retrofit evaluations, loans and grants to pay for energy efficiency improvements, the allowance of energy performance improvements to be offset against rental income, or the ability to offset improvement costs against capital gains tax.
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Our most recent research shows that, while interest in energy efficiency ratings is growing, a higher EPC rating of a property is not having a significant impact on the sale price in most instances.
“If Governments and departments across the UK are serious about moving to net zero through reducing the energy consumption in homes and buildings, landlords and homeowners need a greater financial incentive and support to make energy efficiency improvements.
“The majority of our member agents agree that the best way to do this is to provide clarity on targets, enhance the role of EPCs and introduce grants that cover a broader range of improvements, which is especially important at a time when rising mortgage and other living costs are making it more difficult for many homeowners and landlords to foot the bill for these upgrades.”
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I'm on the commercial side. In my many years of experience, the only time we are ever asked for an EPC is when terms have been agreed and the lawyers are involved, at which time one has to be produced as part of the legal pack. Prospective tenants/purchasers are simply not interested.
So let's express this 'research' in another way:
"Agents confirm that an overwhelming majority of home buyers now consider the property's EPC before making an offer. A staggering 75% now rely on the EPC Grade, which shows the all important winter running cost for a house or flat. This is a significant increase since the last agents' agent survey in 2018. Over a third of agents are now convinced that energy efficiency measures in a home will BOOST the property's value. With the cost of living crisis here to stay these are positive and impressive statistics"
We would make the distinction between EPCs which are a very basic assessment of status (not performance) and Retrofit Plans, which give an indication of the works required to bring a home up to NetZero standards.
We need a system which gives homebuyers information on property performance (eg what it costs to run) and how it could be improved. Retrofit Plans fit the bill because they are essentially an EPC with an attached list of potential upgrades that might be considered.
The RLBA is now working on two Government funded projects to examine how property logbooks can host a Retrofit Plan alongside other information and help homeowners and landlords plan for the work required to bring their buildings up to spec:
The Green Home Finance Accelerator project - looking specifically at giving logbooks with retrofit plans to private landlords to accelerate understanding and implementation of green measures in the PRS.
The EU Horizon funded 'Demo Blog' - a pan-European project looking at extending the use of Logbooks with Retrofit Plans across the whole residential sector.
In both cases the need to give homeowners clear information and costed plans of works (beyond a simple EPC) is fundamental.
Nigel Walley
Chair - RLBA
ps The term 'building passport' has been superseded by 'retrofit plan' in the UK and across Europe for two reasons:
- the tool being described is just a 'plan of works' with indicative costs and EPC impact
- it doesn't have any attributes of a 'passport'
We have had experiences, whereby the home owner has had an air source heat pump fitted and it had a negative affect on their EPC. So can they be influenced by the person carrying out the EPC.
In 99% of EPCs the installation of an Air Source Heat Pump (ASHP) will reduce the EPC rating. This is due to the RdSAP software treating an ASHP as an electrically fuelled source of heating. It is not in anyway influenced by the Energy Assessor who is simply recording and inputting the data. Chris Grant - Founder and CEO of EPC Choice
EPC and Air source pumps are worthless
Having been an estate agent and now an EPC provider, for both domestic and commercial EPCs, I see both sides of this coin. It concerns me how estate agents still rubbish the EPC, showing their ignorance. In my experience the majority of estate agents haven't taken the time to understand the EPC and just aren't interested. So to take a poll of estate agents is absolutely pointless! Bit like asking turkeys at Christmas! Picking up on one point, the EPC is not an occupancy assessment, but is based on typical (average) use of the home. It's about how efficient a home is heated and how efficiently the home keeps that heat in. People are different in the way they use their homes, so in winter, older folk will put on an extra layer, whereas younger folk crank up the heating. Mind you, with the cost of living crisis, most are being ultra careful, to lower their energy bills. The consequence is that, whilst not top of the purchaser's list, the EPC is the best guide they have to the the property's running costs and indicate practical ways to lower the bills. A higher EPC Rating, will suggest a more energy efficient home, with perhaps good insulation and an efficient heating source, so will not require further capital outlay.
David - I completely agree with your concerns about agents “ignorance” (I’d say lack of concern) about EPCs. It demonstrates a short sighted desire to simply sell the property, their ultimate remit. Letting agents can and should be more concerned given they have some obligation to tenants. Until such obligations are tighter the market will not price in energy efficiency. I’d be happy to get behind any movement to effect change…
Mortgage lenders are now looking at EPCs and may offer a better % Rate for more energy efficient homes. Perhaps the opposite - higher percentage rate for poorly efficient homes!
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