The modest premium on energy-efficient homes is a stark reality according to Nationwide's analysis of nationwide data. While a superior Energy Performance Certificate (EPC) rating does influence market value, its impact is limited in the owner-occupied sector. Specifically, properties rated A or B command a 1.6% premium over those with a D rating, translating to an average uplift of around £4,500 based on current house prices across England.
Interestingly, there's little discernible difference in price between C-rated and E-rated properties when compared against D-rated ones. Conversely, F- or G-rated homes typically sell for 1.4% less than their D-rated counterparts, representing a discount of around £4,000.
The market response to EPC ratings is more pronounced within the buy-to-let sector, where A- or B-rated properties attract an estimated 12.2% premium. This divergence highlights different priorities and financial considerations between owner-occupiers and landlords, particularly given the government's proposed mandate for all private rented sector properties to achieve an EPC C rating by 2030.
Despite growing interest in energy efficiency among younger buyers who rate it as 'very important', the upfront cost remains a significant hurdle for many homeowners. Nationwide's senior economist, Andrew Harvey, notes that only a minority of homeowners undertake improvements primarily to boost property value or in preparation for a sale – while 77% are more likely to remain in their home longer due to upgrades.
NAEA Propertymark President Ian Harris reiterated the need for greater government support to help homeowners finance energy efficiency improvements. While acknowledging that strong EPC ratings and green upgrades like solar panels reduce running costs, he stated that they remain one factor among many in the homebuying decision – with location, affordability, and overall property condition driving value.