A new report by Santander has found that a ‘green premium’ based on energy efficiency is emerging in the UK’s property market.
The study surveyed more than 2,300 UK-based homebuyers and owners, estate agents and mortgage brokers, and found that buyers are placing an average 9.4% premium on homes that have already been retrofitted. With the average UK house price standing at £283,000, this equates to an average increase of £26,600, over twice as much as the average £10,000 it costs to make energy-efficient upgrades to a property.
The report also states that 79% of estate agents are seeing more buyers ask about energy efficiency than 12 months ago.
Santander’s study found that would-be buyers now rate energy efficiency as one of the most desirable features of a home, currently more sought after than traditional features such as a bigger garden or off-street parking, and home offices which became such a desirable feature throughout the pandemic.
While the research found evidence that consumers are increasingly aware of the benefits of having and buying a green home, it also suggested a knowledge gap when it comes to understanding what they need to consider to make their homes more energy efficient. 58% of participants did not know what EPC (Energy Performance Certificate) stood for and 60% did not know the EPC rating of the property they lived in.
As part of its net zero aims, the UK government has outlined a target that all homes should have an EPC rating of C or above by 2035. Currently only one-third of UK homes meets this target, meaning an estimated 19 million homes need retrofitting.
Graham Sellar, head of mortgages at Santander UK, commented: “There appears to be a clear increase in the desirability of energy efficient properties as people face the reality of rapidly increasing energy bills.”
“But there is a huge amount of work to be done to ensure homeowners understand the changes they need to make and the importance of both the economic and environmental benefits of making them. Lenders, government, construction companies and others in the housing industry need to come together to support people and policies that will drive forward widespread change.”
