When viewing a potential new home, there is a lot to get excited about – a south-facing garden, the buzzing local community or simply a blank canvas waiting for you to make your mark. However, while often not at the top of the list, an increasingly important consideration for house hunters and prospective tenants is the energy performance of a home. The rising cost of living, including higher energy prices than we’ve seen in years means more buyers and renters than ever are placing value on higher Energy Performance Certificate (EPC) ratings.
EPCs measure the energy efficiency of a property on a scale from A to G, with A being the highest rating. And it’s not just savings on energy bills that more energy-efficient homes enjoy. Research by Rightmove finds that raising the performance of a house from EPC D to C can result in a 3% increase in a home’s value.
What about those who rent their home? The Government’s Warm Homes Plan is also driving a renewed focus on the EPCs of properties, with proposed regulations for increasing the minimum energy efficiency standards for the private rented sector – meaning that all rented properties in England and Wales will need to be EPC C-rated or above by 2030. With 55% of rented properties still falling short, this major upgrade of homes will benefit tenants. In 2022, 24% of private rented sector households were living in fuel poverty. These proposals are already having an impact on the rental market, with research showing that 71% of landlords would be unlikely to buy a property which has an EPC rating of less than C.
All this means that EPCs need to be an effective enabler of making improvements to an existing building in order to improve its energy efficiency, known as retrofitting. This is why Energy UK welcomed the Government’s consultation on reform to the Energy Performance of Buildings regime, which set out proposals to improve the way in which EPCs incentivise the decarbonisation of homes and buildings in England and Wales.
EPCs are a devolved policy, so the Scottish Government recently conducted its own consultation on plans for reform.
The current approach of providing a single A to G rating is too simplistic
EPCs will provide more detailed information than the current single metric
Through these new proposals, the Government wants to equip people with a “wider range of higher quality building performance data in a clear and accessible form” by giving EPCs four metrics that measure different aspects of a building’s performance. These four metrics will include energy cost, fabric efficiency, heating system and smart readiness. There will be a further two secondary metrics, including energy use and carbon.
This is a positive step, as the current approach of providing a single A to G rating is too simplistic and lacks the detail needed to inform homeowners and landlords which measures could improve their property’s comfort, cost and energy efficiency.
The smart readiness metric “will assess a building’s potential to integrate smart technologies that can optimise energy consumption and the ability of consumers to benefit from cheaper smart tariffs.”
With more renewable power coming onto the grid, it is important to increase the capacity for households to flex their energy usage, and be rewarded for doing so. Low-carbon technologies work together to create a smart and optimised household energy system with lower bills.
The smart readiness metric could help to convey the value of these systems to households and tenants. Research commissioned by ScottishPower and WWF found that installation of an air-source heat pump, solar panels and an EV charge point could increase a home’s value by an average of £10,000.
EPCs need to better at engaging customers on building performance
The EPC needs to help raise understanding of the benefits of fabric efficiency; research commissioned by Energy UK and One Home found that 28% of people didn’t think their property needed energy efficiency improvements. With only 3% of homes in England and Wales having an EPC rating of B or better, there is a clear mismatch between people’s understanding of their homes and reality of the current building stock.
The Government’s latest consultation was a missed opportunity to gather evidence on how EPCs should be redesigned to effectively engage homeowners and landlords. Which? has published some insightful consumer research into what people want from their EPCs; it makes recommendations for a dashboard-style visual display that is visually engaging and uses everyday language to communicate to households what improvements to their home could and should be made.
By linking to third-party, independent sources of information, advice and resources such as the Energy Saving Trust, or a retrofit portal on gov.uk, EPCs could really become an effective enabler of behaviour change and drive private investment in green home upgrades.
While there was a missed opportunity to gather evidence on consumer behaviour and motivation, it’s good to read in the consultation document that Government is going to be doing more research with customers on this question.
EPC reform is essential to helping households and landlords be confident in the choices they make to improve the comfort of their home, reduce energy bills, and reduce their carbon impact
We need to improve the accuracy of EPCs
People have long questioned whether EPCs are accurate or reliable enough and this has led to poor confidence in the scheme. This has had a broader knock-on effect to the retrofit market, and in particular the level of private investment drawn into the sector.
The Government’s 2018 call for evidence on EPCs saw the majority of respondents citing assessors incorrectly inputting data as the key cause of variation in EPCs, and these respondents attributed this to assessors having an overall lack of expertise.
In its recently published business decarbonisation policy review, Energy UK supported better training for energy assessors to improve accuracy and reliability. It also called for the Government to undertake a broader review of whether the training for EPC assessors is sufficient, and understand whether it successfully equips assessors with the information they need to deliver accurate and reliable assessments. Energy UK would like to see this taken forward as part of the Government’s response to this consultation.
Overall, EPC reform is essential to helping households and landlords be confident in the choices they make to improve the comfort of their home, reduce energy bills, and reduce their carbon impact. EPCs will underpin the Warm Homes Plan, and action should be taken swiftly to bring forward the reforms set out in the Government’s consultation.
