Buyers demand energy-efficient homes

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The Independent Online

Instability in countries such as Iraq, world commodity prices, or cold weather wouldn't usually directly affect house-buying behaviour in the UK. But higher home energy prices - driven by higher prices for gas and oil - are starting to influence people's choice of properties.

A survey by Yorkshire Bank found that one in four home-buyers, and one in three first-time buyers, would not buy a property if it was energy-inefficient. Energy price hikes explain why: the consumer group Energywatch says electricity prices have risen by 30 per cent since 2003, and gas by 40 per cent, and more price rises are expected.

This has brought the average home energy bill in the UK to close to £1,000, a a significant extra cost. "As well as the capital cost of the mortgage, buyers have to find money for energy bills and Council Tax," says Gary Lumby, head of retail banking at Yorkshire Bank. "For first-time buyers, monthly bills could be as high as the mortgage cost."

But a house fitted with standard energy-saving measures might not sell for any more than an equivalent property with none: energy efficiency has not, until now, been a factor. Most home-owners who fit double glazing, for example, find that the price their property fetches goes up by less than the cost. Loft insulation might have no impact on prices at all.

A house with poor energy efficiency, however, might be harder to sell in today's market. "Buyers can make sure they are buying an energy-efficient home, or research the cost of bringing a house up to an efficient standard," Lumby says. Buyers should ask surveyors to comment on energy efficiency, perhaps securing a lower price as a result.

Several mortgage lenders have schemes designed with energy efficiency in mind. The Norwich & Peterborough Building Society has offered "green" mortgages since 1998. For buyers of existing, rather than new-build, properties, these offer a free energy rating and report; one mortgage comes with £5,000 cash back to fund energy improvements to the home. The society also plants trees to offset the carbon emissions.

According to Alison Rolls of the Norwich & Peterborough, green mortgages remain a niche product, but one the lender is keen to offer. "We do this to raise awareness that people can make a difference by buying a more energy-efficient home, or improving a pre-built property," she says.

But she adds that more buyers are considering energy efficiency and other environmental issues, such as flood risk. The society has worked with a number of builders in its local area to develop more environmentally-efficient properties, and it runs awards for self-build "green" homes.

Governments have also toughened the energy-efficiency requirements for new-build properties, primarily through the building regulations. As a result, new-build properties can be significantly cheaper to run. Rising prices, though, mean that new-build is out of reach for many, especially first-time buyers.

Lumby says such buyers are more likely to opt for the traditional terraced property. These, and flat conversions, are likely to be quite energy-inefficient. Some measures, such as lagging the loft, will make an immediate impact on energy use and cost relatively little. Insulating cavity walls is less messy and disruptive than it used to be.

Other tasks, such as fitting double glazing, might be less effective: most people will not live in a property long enough to recoup the installation costs through reduced energy bills alone. Draught-proofing or even heavy curtains can cut heat loss at much less expense.

Home owners can make energy efficiency upgrades as part of maintenance, such as installing a condensing boiler or double-glazed sash windows if the old ones need renovating. Simple measures such as using low-energy lightbulbs can make a difference.

But if gas and power prices rise further, buyers might start asking much tougher questions. "The market may drive energy-efficient improvements as buyers become more aware of the issue," Lumby says.

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