Much has already been said in the industry press about the financial impact on landlords for improving energy efficiency in rental properties ahead of 2028's deadline. New research from Dashly looks at what the cost is to residential homeowners and how the mortgage market could play a vital role.
According to data from Dashly, the average cost in the UK for homeowners needing to improve their Energy Performance Certificate ratings currently stands at £13,981.87. However, the average cost for a London property to make these enhancements is £14,589.80.
The data shows that the average UK home currently has an EPC rating of 66 points, or band D. With the right work carried out, this could be increased to 84 points, band B. The Government has mandated that all homes should reach at least EPC band C by 2035.
Not surprisingly, carbon emission scores are highest in Greater London. The current average rating is 62 points, where emissions are 4.07 CO2 for the average London property, but this could be reduced to 2.04 CO2 (80 points and band C) with the right works carried out.
Properties in Scotland were found to have the highest current EPC emissions with data from Dashly showing this at 6.33 CO2 with the highest costs to improve this estimated at £18,046.35.
The lowest EPC emissions are found in the East Midlands and West Midlands where both regions show EPC ratings at 3.49 CO2. The lowest expenditure required to reach the 2035 guidelines is in the South West at £13,565.02.
The EPC survey highlights the key areas of the property that need including, for example, adding cavity wall insulation or getting a condensing boiler. The cost of each recommended improvement is an estimated cost taken from industry standard figures.
With over 15 million properties in the UK that need to improve their EPC ratings, the findings further highlight the level of investment needed to get properties performing more energy efficiently. But with mortgage costs rising thanks to increased interest rates and the current cost-of-living squeeze, investing money into a property will feel out of reach for many.
Luckily, the mortgage market is showing some initiative in this area with many lenders offering green mortgages offer a viable solution to this problem. Green mortgages reward homeowners for having an energy-efficient home.
This might include lower borrowing rates to reward those who take the steps to lower the emissions in their home. Some green mortgage offerings provide money towards making energy improvements on a property.
There is also mounting pressure on the property industry from the FCA to reiterate the growing role that green mortgages have to play in decarbonising the UK’s housing stock by helping borrowers to improve the energy efficiency of their homes. This has become an industry-wide issue and everyone in the chain has a role to play. That includes mortgage lenders and brokers.
Martin Leonard, COO, of Dashly, says: “We all need to step up and do our bit for the environment, but making these adjustments to your home can be costly.
The mortgage industry needs to do its bit to ensure homeowners are aware of the existence and possibilities of green mortgages. Up until now, green mortgages have attracted very little attention, but cheaper borrowing rates in a difficult environment could help raise awareness of the benefits of energy-efficient homes.
“EPC ratings have a role to play but the reality is that they mean very little to the average homeowner. People want to know how the rating impacts them in pounds and pence and what they can do about it.
“In the coming months, as the need to save costs becomes even greater, we expect to see an increase in green mortgage products and lenders must continue to innovate to respond to this increased demand. Lenders and brokers should be offering green mortgages as standard by now. Those that do will offer their customers, and the planet, better outcomes."