Energy Performance: The LED lights are on but no-one’s home (improving)
LONDON, 3 NOVEMBER 2021: Moving from an energy performance certificate (EPC) D rating to a C rating could reduce CO2 emissions in England and Wales by more than 5 million tonnes per year, equivalent to 6% of all household emissions.
Key points from Habito analysis of energy performance data:
- Habito reveals cost of energy efficient home improvements but issues stark warning over low public awareness of EPCs and green mortgages in the wake of government’s announcement
- The average cost of moving from a D to a C EPC rating is up to £6,155 taking the national retrofitting bill to potentially £38bn
- 83% of Britons don’t know their home’s EPC rating while 81% of homeowners don’t know what a green mortgage is
But, the average cost of moving from a D- to a C-rated home could be up to £6,155 – the equivalent of two months of average earnings in the UK – according to national EPC data analysed by Habito, the online mortgage broker, lender and home-buying service.
For one-bed flats or properties measuring under 55m the cost is up to £3,653. For a small mid-terrace house (under 100m²), it is up to £6,400. For a large family detached home (100-200m²) the potential cost rises to £12,540, more than double the national average.
The government is on a mission to retrofit the UK’s ageing housing stock – which contributes 20% of the nation’s CO2 emissions – and bring it up to an energy efficiency rating of C or above by making sustainable home improvements ranging from small low-cost everyday adaptations (such as switching to LED lightbulbs) to large building works (such as installing solar roof panels or heavy wall cavity insulation) that require significant investment.
But with 59% of homes registering a D rating or below, this is not an insignificant home improvement bill and could amount to as much as £38bn nationally. There are currently around 29 million homes in the UK, of which 19 million have an EPC lower than C.
The EPC is the only measure – available today – of a property’s energy efficiency. The document includes estimated energy costs, as well as a summary of the property’s energy performance-related features and is needed whenever a property is bought, rented or built and is valid for 10 years. Most properties with a D rating have between three and six retrofitting recommendations included in their EPC.
But awareness of EPCs and their importance is low: Two in five (42%) Britons have never heard of an EPC. A further two fifths (41%) know what an EPC is but don’t know their home’s rating. Just 6% know their exact rating, while just one in 10 (12%) has a “rough sense” of what their home’s rating is.
The Department for Business, Energy and Industrial Strategy has just announced a new initiative that would see mortgage lenders use EPC data to make lending decisions in favour of more energy-efficient homes.
Daniel Hegarty, founder and CEO of Habito, said:
“20% of the UK’s carbon emissions come from our homes. We’re quite literally sitting on a ticking time-bomb. Collectively, we, and future generations, can’t afford for that not to change, so it’s great news that sustainability in the home is being prioritised by the government. But it’s a huge problem that awareness is so low and that remedial costs are so high: the UK’s retrofitting bill should not just fall on the shoulders of consumers to settle.
“For too long sustainable products and services have carried a ‘green premium’. Saving the planet can’t be the preserve of the rich or the super-fans. And simply focusing on banks and lenders to provide the solutions could put those least able to afford retrofitting measures at a disadvantage: down valuations, negative equity, even a new type of mortgage prisoner, trapped in homes with unfavourable EPC ratings. The government is in danger of creating another have vs have-nots policy. What is needed is radical collaboration to create innovative and accessible green financing and home-improvement solutions.”
Research carried out by Habito in November 2020 showed that awareness of ‘green mortgages’ – mortgages that reward the borrower with lower monthly repayments or cashback when they make home improvements to make their home more energy-efficient and move up EPC bands – is low. Four in five (81%) mortgage-holders in the UK don’t know what a green mortgage is. But when explained, 87% said they would be interested in a green mortgage, if it were competitively-priced and suitable for their needs.
As a next step, Habito is adapting its whole-of-market mortgage brokerage to better surface all available green mortgages for purchase and remortgage customers and has taken steps towards securing a funding partner to develop the next generation of competitively-priced green mortgages, where mortgage rates improve in line with sustainable home improvements that drive up a property’s EPC rating.
Hegarty continues:
“Our analysis tells us that if everyone with a D rated property moved to a C rating, we could reduce CO2 emissions in England and Wales by more than 5 million tonnes, equivalent to 6% of all household emissions annually. We – government and industry – need to work harder than ever to explain the value and importance of understanding your home’s EPC. They’re the key to optimising your home’s energy efficiency, saving money on bills and managing your home finances sustainably.”
As part of Habito’s long-term commitment to driving down household emissions, Habito is inviting potential funding partners to get in touch via [email protected] to discuss developing unique, innovative green mortgage products and services. Customer information about EPCs, sustainable home improvements and green mortgages can be found at habito.com/hub.
Habito is attending the 26th UN Climate Change Conference of the Parties (COP26) which is taking place in Glasgow from 31 October – 12 November 2021. As a member of the B Corp Finance Coalition, Habito will be taking part in a breakfast briefing at COP26 to discuss how it and its fellow members are reshaping finance through purpose and partnership. Details can be found here.
Kindly shared by Habito
Main photo courtesy of Pixabay
