Mark Bailey, partner at Landwood Group
Attempts to improve the energy efficiency of UK properties are laudable but, without adequate funding and support, are doomed to fail.
Energy Performance Certificates have been mandatory since 2007 but are not having the desired effect on the push for energy efficient homes.
Introduced following an EU directive, EPCs have had some success in Europe but have not made a huge impression in the UK where we have a much older housing stock.
The UK’s housing stock is the oldest of any of European countries, with a greater share of homes built before 1946 (38 per cent) than anywhere else in the continent. Of course older homes tend to be poorly insulated, leading to higher energy bills and cost more to make efficient.
It is estimated that more than half of the UK’s housing stock remains below a C rating.
The reasoning behind the bid to reduce carbon emissions in housing was clear. The European construction sector accounts for approximately 40 per cent of final energy demand and 36 per cent of carbon dioxide emissions, with residential buildings responsible for two-thirds of the sector’s energy consumption.
So, with the best intentions, the European Union introduced EPCs to improve transparency and encourage sustainable renovations – the initiative has fallen considerably short of expectations.
EPCs suffer from fundamental flaws undermining their effectiveness: poor data quality, highly subjective process, limited public awareness and inadequate legislative framework.
These shortcomings have eroded public trust in the certification process. Administrative complexities and bureaucratic hurdles further complicate implementation, while the technical language creates a significant disconnect between specialist assessors and everyday users.
Trust is further eroded due to the mixed quality of assessments. An investigation by Which? in 2024 found that, of an admittedly small sample size, the majority of EPCs were inaccurate.
Eight out of 12 of the homeowners noted that their EPC had major errors – they said the descriptions of key aspects of their home, such as windows, roofs and heating systems, were incorrect. One EPC contained several significant errors and the reassessment raised the energy efficiency rating moving up two bands, from D to B.
It’s fair to say that EPCs are also doing nothing to help low-income families who tend to live in less energy-efficient housing.
Low-income households face a disproportionate financial burden from renovations. The BRE estimates that improving a property from an EPC rating of D to B typically costs between £8,000 and £15,000, to reduce annual energy bills by approximately £500.
For those looking to sell, positive EPCs can make their home more saleable but are unlikely to improve the value.
The disparity in market performance between energy-efficient homes and their less efficient counterparts is becoming increasingly evident. Research from UCL Energy Institute shows that properties with the lowest EPC ratings (F and G) now spend, on average, 25-30 per cent longer on the market than comparable A and B-rated homes.
In fact, half of all lenders now offer special ‘green’ rates. Energy efficient homes are typically those with an EPC rating of either an A or B which will further improve that saleability.
Without financial support, how many people struggling in the current economic climate can afford the investment in, for example, heat pumps and triple glazing?
How do landlords investing in properties pay for the improvements without passing that cost on to tenants?
The government must design more equitable financial mechanisms beyond paltry subsidies, with tailored incentives addressing different economic circumstances.
Without targeted support, EPC policies risk exacerbating housing inequality whilst failing to deliver on environmental objectives.
To genuinely accelerate a transition to low-carbon housing there needs to be a new approach rather than one that penalises homeowners, landlords and tenants who are unable to afford the improvements.