Households could reduce their annual energy bills by approximately £400 through energy efficiency upgrades, according to new research from Nationwide Building Society. However, despite these potential savings, the UK's largest building society reports that buyers are only paying a modest premium for more environmentally friendly and economical properties.
Upgrade Costs Vary by Property Type
The cost of upgrading a property to an Energy Performance Certificate (EPC) rating of C or above varies depending on its initial condition, age, and structure. The most affordable improvements include fitting LED lighting throughout, installing smart heating controls and thermostats, and adding insulation. Mid-range options include loft insulation, cavity wall insulation, double or triple glazing, and boiler replacement. The most impactful—and costly—upgrades include fitting heat pumps, solar panels, and battery storage systems.
Modest Premium for Energy-Efficient Homes
Nationwide highlighted that while these enhancements can run into several thousands of pounds, properties with the highest energy efficiency ratings of A or B command just a 1.7% premium over comparable homes with a D rating, currently the most prevalent EPC band across Britain. In contrast, the poorest performing homes, rated F or G, are valued at roughly 3.5% less than similar D-rated dwellings.
Andrew Harvey, senior economist at Nationwide, said: "Our analysis suggests that a more energy efficient property rated A or B attracts a modest premium of 1.7% compared to a similar property rated D. Overall, our research suggests that, for now at least, energy efficiency has only a modest influence on house prices for owner occupiers."
Government Targets and Savings Potential
The research emerges as families continue seeking ways to reduce energy expenditure following several years of high gas and electricity costs. Government statistics referenced by Nationwide indicate that upgrading a standard home to an EPC rating of C could deliver savings of approximately £400 annually on energy bills, though the typical expense of undertaking the necessary improvements stands at roughly £8,100. Ministers aim for as many properties as possible to achieve EPC band C by 2035 as part of initiatives to reduce carbon emissions and lower energy use.
Progress and Challenges in Housing Stock
Nationwide reported that Britain's housing stock has grown more efficient over the last ten years, with about 40% of properties now rated C or higher, in contrast to merely 14% in 2009. Nevertheless, roughly 60% of homes still hold ratings of D or below, underlining the magnitude of the challenge confronting the government.
The most substantial savings are accessible to those owning the least efficient dwellings. Nationwide stated that implementing all recommended energy-efficiency measures in homes rated F or G could reduce bills by an average of £1,780 per year, though the work might exceed £25,000.
Future Outlook on Energy Efficiency
Mr Harvey suggested that perspectives on energy efficiency might shift in the years ahead should governments implement more robust incentives to motivate homeowners to upgrade their properties. He added: "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."
