Rising concerns around energy prices and the environment will have significant implications on the valuation of energy efficient, low carbon homes in the coming years.
According to a recent YouGov survey commissioned by Legal & General, good insulation and lower energy bills are now in the top three general criteria, alongside location, for people choosing a new home. This suggests that energy efficiency is now more important to people than the size of a property.
The research also showed that buyers and renters are increasingly considering their carbon footprint when moving home. When asked why they would buy or rent a low carbon home, 65 per cent of people cited environmental factors such as helping to prevent climate change.
On average, buyers said they were willing to pay a 10.5 per cent premium for a low carbon property, rising to up to 20 per cent with Gen Z buyers. Renters, meanwhile, are willing to pay a 13 per cent premium.
Green tech boosts house value
The survey’s findings are similar to a separate survey conducted recently by GoCompare Energy, which found that nearly three quarters (72 per cent) of people are more likely to buy a property if it is energy efficient. Good levels of insulation and solar panels are seen as particularly attractive features.
Earlier this summer, analysis by WWF and Scottish Power revealed that adding insulation, a heat pump, solar panels and electric vehicle charging to a home could boost its value by around £10,000.
Legal & General said the trend could represent a major turning point in the way properties are valued in future.
John Alker, head of sustainability at Legal & General Capital, commented: “Climate change and energy efficiency have risen right up the agenda for many people when choosing a home. This research helps cement the business case for investors and developers to invest in low carbon homes.”
Confusion over EPCs
However, despite the appetite for low carbon homes, only one in three people surveyed by YouGov had a good understanding of Energy Performance Certificates (EPCs) – suggesting that more clarity is needed about what makes a home energy efficient.
“The research also shows that clarity is key when it comes to low carbon and energy efficiency,” Alker added. “Energy Performance Certificates are not well understood—they need reforming to better reflect real world energy consumption and to help incentivise adoption of low-carbon technology.”
