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Energy efficiency ratings currently have limited impact on house prices

There is just a 1.7% house price premium for an owner-occupier property rated A or B compared to a D-rated home, according to a special report by Nationwide House Price Index.

The data, which was drawn from Nationwide’s house purchase mortgage lending at the post survey approvals stage in England and Wales in the period January 2019 to December 2019, found that properties rated F or G attract a 3.5% discount compared to a similar D-rated property.

Andrew Harvey, senior economist at Nationwide, said: “Decarbonising and adapting the UK’s housing stock is critical if the UK is to meet its 2050 emissions targets.

“Overall, our research suggests that, for now at least, energy efficiency has only a modest influence on house prices for owner occupiers, where an impact is only really evident for the best and worst energy efficiency ratings.

“However, the value that people attach to energy efficiency is likely to change over time, especially if the government takes measures to incentivise greater energy efficiency in future to help ensure the UK meets its climate change obligations.”

He added that, within the owner occupier sector, there are significant differences in energy efficiency between those who own their property outright and those buying with a mortgage.

“In part, these differences reflect the different types and ages of dwellings within the two groups,” he stated.

“Those with a mortgage are more likely to live in newer properties and flats, whereas those owning outright tend to live in older houses and are also likely to be older themselves and have lived in their property for longer.

“Consequently, those owning outright are less likely to live in the most energy-efficient homes.”

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