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Green Premium on capital values may justify energy efficiency upgrades

A new report by the Santander bank claims a ‘green premium’ based on energy efficiency is emerging in the UK’s property market.  

The study which surveyed more than 2,300 adults, found that buyers are placing an average 9.4 per cent premium on homes that have already been retrofitted. This equates to an average increase of £26,600 based on the average UK house price of £283,000 – over twice as much as the average £10,000 it costs to make energy efficient upgrades to a property. 

Property agents also report that buyers are paying an average 15.5 per cent more for a home that meets high energy efficiency standards, with over a third reporting buyers are paying more than 20 per cent extra in their area.  And some 79 per cent say they are seeing more buyers ask about energy efficiency than they were a year ago.  


The study found that would-be buyers now rate energy efficiency as one of the most desirable features of a home. While there was a trend during the Covid-19 pandemic for buyers to want a bigger garden or home office, energy efficiency is now cited as more attractive than these features as rising energy costs become a concern.   

While the research found evidence that consumers are increasingly aware of the benefits of having and buying a green home, it also suggested a knowledge gap when it comes to understanding what they need to consider to make their homes more energy efficient.  

As part of its net zero aims, the UK Government has a stated aspirational target that all homes should have an EPC rating of C or above by 2035. Currently only one third of UK homes meets this target, meaning an estimated 19m need retrofitting: many private rental units are thought to be in this category.

However, 58 per cent of respondents did not know what the initials EPC stood for, and three in five people did not know the EPC rating of the property they currently live in.  Only 15 per cent of people would strongly agree that they have found it easy to access information about energy efficiency. 

Santander has put together five recommendations for government to deliver the support needed to ensure net zero targets are met: 

- Enhance the existing EPC ratings framework while working to develop a more robust and accurate energy performance certification scheme. EPC ratings need to be independently verified, more consumer friendly, and regularly updated, to allow timely data to be accessed from an easily accessible central database;

- Introduce a standardised toolkit backed by the Energy Savings Trust (EST) that could be given to consumers at every home financing and refinancing opportunity. This would be supported by a government-led awareness raising campaign to launch the introduction of the toolkit and signpost to it as a central source of information;

- Explore how taxation could be used as a lever to drive demand, for example Stamp Duty rebates for homebuyers who have invested in retrofitting property they have bought;

- A clear and realistic timeline for improving minimum energy efficiency standards (MEES) for domestic private rented and owner-occupied properties;

- Establish the skills infrastructure and capacity for retrofitting at the necessary scale. This should include introducing new qualification (e.g., T level) to teach the skills needed to carry out the retrofitting/decarbonisation of buildings, and supplement this with a kick starter scheme for green skills to equip newly qualified retrofitters with the necessary experience. A long-term Government commitment is necessary to give firms the confidence to invest in people and training. 

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  • George Dawes

    Total and utter twaddle , the whole green initiative is a scam


    Agreed. This is a classic emperor's new clothes scam trying to make us all rush out and spend tens of thousands of pounds for very little return on investment (savings in energy costs) all so that if we sell up the new first time buyers (or other buyers) will choose our property to buy over others.

    The Santander report is based on a tiny sample of the population.

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    Especially the EPC inspection which is carried out by operatives who know nothing about the heat transfer and insulation efficciencies for example and whose only qualification is a 2 week training course. Do you also know that installing a heat pump reduces the EPC score as you are changing from gas to electricity for heating.


    Try 2 days...


    EPCs were bought in to reflect running costs, they need a complete overhaul to reflect CO2 emissions.

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    I'm a huge fan of some green measures such as smart heating programmers, solar panels, hot water diverters, etc but there really needs to be better support for these measures in the tax system. While I could see the logic of solar panels not being a tax deductible expense when FIT payments were classified as non taxable income now FIT payments no longer exist for new installations surely there should be tax incentives for fitting them to rental properties.

    In an HMO with inclusive bills gas and electric are allowable expenses so surely solar panels and battery storage should also be allowable at least as an annual write down not a capital improvement?


    I know someone who uses battery storage to store off peak power then uses the stored power during the day, it works, but the pay back period is 7 yrs, as with an EV the question is how long before the battery needs replacing ? I'm told an EV needs a new battery after 7 yrs, the cost effectively writes the vehicle off


    Andrew - the battery thing is probably just scaremongering. People used to say the same about the Toyota Prius when they first came out. I currently drive one that is 12 years old and one of my tenants still has my previous Prius which is 18 years old. No battery problems in either and they're both high mileage.
    We have a new EV with a 7 year warranty. They clearly don't expect battery problems anywhere close to 7 years.
    The solar panels we have had for 10 years have been very impressive. The pay back was less than 7 years and now the hot water diverters have been invented the saving on both gas and electric is very good. Obviously the equation has changed now there isn't a Feed in Tariff payment for new installations, a kWh of electric costs 3 times what it did and batteries are main stream. As a retro fit batteries are still a bit too expensive to add to my original solar houses but hopefully prices will come down or more time of use tariffs will make them attractive.

  • Rik Landlord

    Once wholesale prices drop again no one will care again

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    Only an increase in rent chargeable justifies non essential expenditure on rental properties, so that rules out every rental property in Scotland from getting "green" investment.

    I wonder if wee Green ( really deep red) Patrick Harvey will be happy with that outcome due to his crazy rent freeze in the face of rising mortgage rates?

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    Santander, easily the worst bank on the high street, I wouldn't pay any regard to anything they say

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    The average £10,000 it costs to make energy efficient upgrades to a property? And the rest! Beware house buyers paying green premiums - some of the EPC C ratings have not been correctly assessed.

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    The average £10,000 it costs to make energy efficient upgrades to a property? And the rest! Beware house buyers paying green premiums - some of the EPC C ratings have not been correctly assessed.


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