"It’s clear that the current incentives aren’t yet big enough to make people sit up and take notice, and even the incentives that do exist aren’t easy to find out about."
- Tim Bannister, director of property science at Rightmove
Earlier this week, Michael Gove, Secretary of State for Levelling Up, Housing and Communities, indicated that landlords could be given more time to improve their properties, but clarity on these improvements is vital, especially in light of Rightmove’s latest findings.
Analysing 300k properties that sold twice over the last fifteen years with newly issued EPCs, Rightmove found a correlation between green improvements and property value. Notably, sellers who had improved their homes from an EPC rating of an F up to a C could command an average price premium of almost £56,000 (+15%) on top of the local house price growth. Meanwhile, property listings for sale that mention electric car charging points have risen in popularity by 592% since 2019.
Consequently, landlords are increasingly shunning lower-rated properties, with 61% revealing that they would no longer buy a rental property below an EPC rating of C; this reflects a 14% increase since last year. Only 4% of homeowners have plans to have a heat pump installed in their homes.
However, Rightmove suggests that more significant incentives need to become available to help homeowners and landlords with the cost of making green improvements after the second edition of Rightmove’s annual Greener Homes report revealed that 60% of homes for sale on its platform (and 50% of homes available to rent) have an EPC rating of D or below.
Although Rightmove highlights the need for new measures to be carefully considered, it suggests that a stamp duty rebate scheme where new buyers are rewarded if they make green improvements in the first few years of purchase could be a potential remedy. Other measures include more grants or tax benefits for green technology such as electric car charging points and solar panels, improved incentives for energy-efficient homes with new (re)mortgages and enabling the creation and implementation of energy-efficient technology.
Over the last four years, there has been a degree of progress, but Rightmove believes that if it continues at the current rate then it will be decades before 100% of homes for sale and rent hit an EPC rating of C. If the market continues at this rate, Rightmove predicts that houses for sale will take the longest at 43 years to hit 100% of properties with EPC rating of C or above, followed by flats for sale (25 years), houses to rent (31 years), and flats to rent (16 years).
When asked about the biggest reasons to make improvements to their home, 78% said saving money on energy bills was the biggest reason for making changes. This was followed by making their home more insulated (54%), reducing their carbon footprint (35%), adding value to the property (33%), and lastly, helping to sell their home in the future (26%). Only 6% of homeowners disagreed that it was worth paying more money for a greener home.
Recognising the importance of including EPC ratings in property descriptions, the number of agents including this information has increased by 24% since 2022, and up to 59% over the last three years. Likewise, there has been a 40% increase in mentions of electric charging points over the last twelve months.
Commenting on these findings, Tim Bannister, director of property science at Rightmove, has said:
“The benefit of making green improvements can be seen in the overall premium that a seller can command. Of course, improvements that make a home more energy efficient could also mean the condition improves, such as installing new windows, and so owners will be weighing up the cost of improvements versus the return they can get when they come to sell. But the end result of making improvements is not just a refurbished home worth more money, it’s also a greener home.
“In order to shift the demand to greener homes, incentivisation and education is key. The ‘price of cozy’, or a better insulated home, is hard to quantify until people see how it can change how they live for the better, and they need to be able to afford it.”
Bannister continued: “Houses are much more energy inefficient than flats, and the sales market is lagging behind what we’re seeing in the rental market. The challenge right now is that there are not enough suppliers and equipment for the greenest option to be the most affordable option for homeowners and landlords. We need to wait and see what the government proposes or what green finance options become available. Affordability will remain a challenge unless the incentives are big enough.”
Johan Svanstrom, chief executive at Rightmove, added:
“Some 25% of UK emissions are directly attributable to the built environment. In the residential sector, there are significant challenges to achieving greener homes at an adequate speed, not only the cost barriers to retrofit but also a lack of knowledge on what’s best to do to a home and what it will yield. I believe Rightmove can play an active role in supporting the green transition in the UK property sector.
“We’re increasing our efforts to help the millions of people who visit our platform to become better informed and to understand what choices they have. Today's Greener Homes Report is a good example of how we are using Rightmove's extensive data and insights to help inform and facilitate discussions across the industry, policymakers and our customers and partners.”
