What does the future hold for green homes?

There is no question that we need to increase our homes' green credentials. But given that so much of the housing stock in the UK has an EPC rating below a C - how difficult would it be to transition to greener homes?

Currently, without a valid exemption, properties with an EPC rating of less than E cannot be rented out. There are plans that would raise this requirement's grade to C. The government's overall objective is to get as many residential properties up to an EPC grade of C by 2035 as is "practicable."

With a revision to Part L of the Building Regulations in June, futureproofing has already gotten underway. New guidelines and objectives for energy efficiency in new construction and renovations have been created as a result.

We don't yet know how much change awareness and persuasion alone can bring about or how much more legislation may be on the way. Any significant reforms are likely to be postponed by the hazy political landscape.

Key Points

• More real estate agents are promoting green features as selling advantages as more homebuyers are becoming aware of them and looking for them on the market
• Higher ratings are correlated with higher property values, and lately, EPC B-rated homes surpassed D-rated homes as the quickest to sell
• Landlords are examining their portfolios to determine whether the cost of upgrades justifies the potential profit
• Letting agents are eager to learn more about the specifications and what they should be telling their landlords
• Homeowners clearly want to make improvements, like adding solar panels, but there are many roadblocks
• People want to change their lives - But many are unable to afford it and are unsure of what to do

Green Facts

• Compared to 2020, there are already 73% more green features in home listings
• In the future, 47% of landlords said they would not purchase a home with an EPC rating below a C
• A home's value could increase by an additional 16% by upgrading it from an F to a C rating
• 89% of homeowners see reducing energy costs as the primary reason for renovations
• 62% of homeowners said they would think about putting solar panels on their houses

Although lowering energy costs is the primary driver of greenhouse upgrades, many homeowners also want to make these modifications to help increase the value of their homes and future-proof them for sale.

The good news is that there is a direct link between house upgrades and rising property values.

In the upcoming years, it's possible that it won't just fetch a better price, but also draw more interest from buyers. Since the start of 2020, there has been a 73% increase in the use of phrases like "low carbon" and "sustainable," which agents are increasingly using to highlight green aspects in their properties as selling advantages.

Understanding the EPC

EPCs were first made available in 2007 with the goal of increasing homeowner awareness of their home's energy efficiency and offer suggestions for improvements.

A new digital EPC record was introduced in England and Wales in September 2020 to make it simpler to determine whether your home has a current certificate.

Having a rating of C or lower does not rule out the possibility that these properties will eventually receive a higher rating after making significant modifications.

The difficulty with older properties

Character homes, thatched cottages, and Victorian townhouses are frequently regarded as buyers' ideal residences, and agents have long said that period homes can bring in a sizable premium.

Will anything change, then? Of course, you can make investments to make your Victorian property more environmentally friendly before selling it, but many will still have single-glazed windows and outdated boilers. Will potential purchasers stop being drawn to the cosy-looking wood-burning stove and start demanding money to make the changes?

Buyers are looking for efficiency

In 2022, one in ten people who are actively looking to relocate cites the desire to live in a home with greater energy efficiency as their primary motivation. Although space and relocating closer to family and friends are still clearly more important, it does suggest that an EPC rating may become one of their top priorities in the future.

Although it has taken time, there are clearly indications that purchasers are actively looking for green terms.

Purchasing a new build relieves homeowners of the burden of worrying about energy efficiency upgrades for older homes.

Are landlords aware?

Since 2018, new legislation prohibits landlords from renting out homes with an EPC rating below that, unless they receive an exemption. Although this first step only merely began to scratch the surface of upgrading the rental stock, it did show the industry the anticipated course of development.

According to current proposals, landlords will need to make at least a C-level improvement to their buildings. The current deadlines for new leases are 2025 and 2028 for existing leases, however, these deadlines could change.

• 25% of landlords don't know what their rental homes' EPC ratings are
• 35% of landlords are unaware of the government's plans to make EPC ratings for rental properties C

Can real estate agents help?

Many agents are probably already informing landlords of the possible changes and collaborating with them to develop a strategy for bringing their portfolio into compliance. They will assist them in making the necessary upgrades, investments, or disposals to avoid having to pay potentially enormous bills in the future.

Long-term, this will be a good step toward raising the calibre of rental properties, but the journey there will be challenging.

What should tenants be aware of?

Rent increases are occurring more quickly than ever before. Due to historically low-interest rates, renting a house now costs 40% more than it did ten years ago, but paying a mortgage has increased by 13%.

As a result, landlords will be cautious about raising rents significantly as a result of upgrades, especially in cases where they have long-term, dependable tenants residing in their properties.

However, if they complete the repairs before renting out the house again and it is now in much better shape, they might be hoping to recoup their investment through increased rentals. Although it is hoped that tenants' costs will be lower, it is unlikely that this will be sufficient to make up for the higher rates.

Energy prices continue to rise

The main driving force behind homeowners' upgrades is to reduce their energy expenditures, which have become increasingly of a worry due to the current rise in energy prices.

Homeowners' desire to make their homes greener is evident.

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