Environmental issues appear to be in the news with increasing regularity and many amongst us might comment that this is not before time.

Whether it’s the Insulate Britain protests, the inaugural Earthshot prizes, London’s ultra-low emission zone being extended, or the hikes in wholesale gas prices putting many companies who spot buy energy out of business; we are all more focused than we were on what appears to be the inevitable ramifications of climatic change.

And you can expect to hear more about this in the weeks to come, as at the end of this month, the UK will host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow.

With this in mind, we decided to dedicate this weeks’ client briefing to environmentally friendly property and look at what effect (if any) having an energy efficient home has.

Energy Efficient Homes

The first thing we did was to look at energy efficient homes and assess how they impact the property market. We identified energy efficient homes as those with more efficient EPC ratings.

It quickly became clear that whether a property was energy efficient or not, as a factor, was almost irrelevant to its market performance.

  • Energy efficient properties do not sell or complete faster than those with poor energy efficiency
  • There is no price premium for an energy efficient property, outside of an exceptionally small number of properties that are rated A
  • Although energy efficient properties are slightly more likely to sell than their non-energy efficient counterparts, the difference really is very marginal

In short, the energy efficiency of a property on average does not make a difference to demand, supply or prices.

Maybe it’s simply a matter of time prior to the property market adapting to energy efficiency, but right now, it makes virtually no difference and certainly not seen in any way as premium.

Solar Panels

Next, we turned our attention to photovoltaic (PV) systems, or to the non-scientists amongst us, solar panels.

Again, we found that properties with solar panels do not sell or complete faster than those without.  In addition, there are no significant differences in the likelihood that properties with solar panel will sell.

What we did find here is that there is a price premium for properties with solar panels fitted.

The following graph looks at properties with solar panels versus those without, on a like-for-like basis, and clearly what we see is that there is a difference between the two of nearly £80,000.

 

What is not immediately clear from the chart above is that the gap is getting wider.  In the last twelve months, the average premium was around £86,000 versus the twelve months prior to this where the average premium was closer to £71,000.

So, if you own a house with solar panels, you are in luck!  There’s no difference in the likelihood or time it takes to sell, but it does command a 21% premium on the asking price.

Non-Standard Heating Systems

Finally, we looked at non-standard heating systems. Heat pumps have also hit the news recently as a possible option for many homes in the UK in the move away from gas boilers. Air source heat pumps are significantly cheaper than ground source, with the former retailing at between £4k-8k.

We should warn you however that today, property with non-standard heating takes 22 days on average (or 40%) longer to sell than their standard heating counterparts.

On the positive side, demand in September 2021 was 13% higher for property with non-standard heating versus standard. Over the course of the last two years, property with non-standard heating has commanded a £15,500 price premium, which is about 5%.

 

Source: TwentyCi