Official: Retrofit Increases Property Value

Green Growth Sparking As House Value Pinned To Energy Efficiency

If you retrofit your property. It will increase in value. It's a fact. What is holding people back, what needs to change and how do people do it?

Retrofitting of existing buildings is still not a mainstream concern for most UK homeowners. Evidence from the first Green Deal in 2013-15 saw pathetic take up;

Just 14,000 households (0.05 per cent of target properties) took advantage of Green Deal loans during the scheme’s existence, even though they were well publicised. Green-Alliance Reinventing Retrofit

These were easy to achieve retrofit upgrades like cavity insulation and roof insulation. So what's changed?

Trinity Rose Chartered Surveyors and the National Energy Foundation (an independent domestic energy and sustainability charity) looked at houses to assess the impact of retrofit works on the Market Value (MV). The energy efficiency measures (EEM) were consistent with those required to improve the Energy Performance Certificate (EPC) of each property - in simple terms making the homes warmer, safer and more energy efficient.

Property And The "Green Premium"

The research indicated that energy efficient homes with an increased EPC rating increasingly impacted upon the value of a home.

"In July 2022, Rightmove published their ‘Green Homes Report’ within this they present their data showing that an improvement of a property’s EPC rating from F to C could add an additional 16% to its value."

With buyers seeking out more energy efficient homes and the advent of digital logbooks for a property, it is much easier for prospective buyers to gauge how much work has been done to improve a property.

With increased public awareness of the benefits of retrofit, the report found 70% of property purchasers believe correctly fitted EEMs affect the Market Value positively.

"Reports from mainstream lenders such as Halifax and Santander are seeing that purchasers are willing to pay a ‘green premium’ of up to £40,000 when purchasing a property that is notably more energy efficient, for example comparing a property with an EPC rating of G to a rating of A."

Retrofit And What It Means

The report highlighted some challenges regarding the perception of retrofit. Our experience at Refurb and Retrofit Magazine is that if correctly explained, no one thought having a warmer, more comfortable and cheaper to run home, was a bad thing. Ever.

It's interesting that in the report only 4% of recent purchasers strongly disagreed with the notion of the benefits of retrofit outweighing the costs. So the inherent value of the works appeared to be as important as the cost.

So perhaps it's still the idea that the up front costs and the relative, perceived disruption of EEMs holds people back. Homeowners clearly need an evidence based insight and simple to understand explanation of how energy efficiency measures will impact their property value and fuel bills.

In the report there is an emphasis on the need for government support and incentives to encourage retrofitting.

Here's what could happen if the truth about retrofit and property values got out (with a little help from us...);

• Public awareness and desire for retrofit snowballs as the financial benefit is promoted alongside the environmental gains, sign posted with evidence based case studies, EVERYWHERE.
• Robust financial incentives drive demand for retrofit uptake. Grants and tax rebates would be good, but how about no VAT or retrofit materials?
• A company comes up with a simplified retrofit service which eliminates the complex moving parts a retrofit experience is made up of now.
• Legislation penalises property owners who fail to increase an EPC by a single grade during ownership.
• Make the estate agency industry report on EEMs as well as EPC ratings.
• Get better reporting on EEM impacts on property values, to accelerate improvements.

What Needs To Change?

Retrofit isn't easy to understand. It's easy to hand money over but then what have you paid for? Make the process easy to understand. That's all.

Doing Retrofit

Completing retrofit, to any participants in the construction process, is their reason for living. Their Raison D'Etre (as my pompous Uncle might say).

But this is just one of the inherent failings in the adoption of retrofit in the UK. Most people view home and property issues like an inoculation. Good for them, but a pain.

So the more painless we can make the process the better.

Adding value to your property is one thing - but how do you make it easy.

We've been talking to some specialists. And they schooled us.

That's coming soon.

If you want to be sure you understand everything in the report here's a glossary of terms used and some links for you to read up on;

1. Energy Efficient Measures (EEMs): ENERGY STAR - Learn about various energy-efficient products and practices that help reduce energy consumption and improve efficiency.
2. Market Value (MV): Investopedia - Comprehensive guide explaining what market value is and how it is determined.
3. Energy Performance Certificate (EPC): UK Government - Official UK government site explaining EPCs, their importance, and how they are calculated.
4. International Valuation Standards Council (IVSC): IVSC Official Website - Information about the IVSC and its role in setting international valuation standards.
5. Royal Institution of Chartered Surveyors (RICS): RICS Official Website - Details about RICS, its standards, and its role in the property and construction sectors.
6. Air Source Heat Pump (ASHP): Energy.gov - A guide on how air source heat pumps work, their benefits, and installation considerations.
7. Photovoltaic Panels (PV Panels): EnergySage - Detailed information on solar photovoltaic panels, their benefits, and how they work.
8. Cavity Wall Insulation: Energy Saving Trust - Insights on cavity wall insulation, its benefits, and how it can improve energy efficiency in homes.
9. Loft Insulation: Energy Saving Trust - Guide on loft insulation and its role in reducing energy bills and improving home comfort.
10. Triple Glazing: Glazing Advice - Information on the benefits of triple glazing and how it compares to double glazing.
11. Green Premium: GreenBiz - Articles and insights on the green premium and the financial benefits of sustainability in real estate.
12. Market Interest: Investopedia - Explanation of market interest and its impact on investment and property values.
13. Utility Bills: Energy.gov - Tips and strategies for reducing utility bills through energy efficiency.
14. Energy Crisis: IEA - Analysis of global energy security and crisis management from the International Energy Agency.
15. Comparable Method: Investopedia - Guide to the comparative market analysis method used in property valuation.
16. Red Book Global: RICS - Information on the RICS Red Book Global Standards for property valuation.
17. Greenwashing: Business News Daily - Explanation of greenwashing and how to identify it in marketing.
18. Net Zero Targets: UK Government - UK government's strategy and targets for achieving net zero emissions by 2050.
19. Decarbonisation: IEA - Insights on decarbonisation efforts and technologies from the International Energy Agency.
20. Stamp Duty Land Tax (SDLT): UK Government - Official information on Stamp Duty Land Tax and its implications for property buyers.
21. Government Grants: Grants.gov - A comprehensive resource for finding and applying for government grants.
22. Rightmove SCT (Surveyor Comparable Tool): Rightmove - UK's largest online real estate portal and property website.
23. Occupier Comfort: Energy.gov - Guide to improving occupant comfort through home insulation and energy efficiency measures.
24. Financial Incentives: Energy.gov - Information on various financial incentives and rebates for energy efficiency improvements.
25. Fossil Fuels: EIA - Detailed explanation of fossil fuels, their uses, and environmental impact from the U.S. Energy Information Administration.
26. Thermal Efficiency: ScienceDirect - Academic articles and explanations on thermal efficiency and its applications.
27. Utility Costs: Energy.gov - Tips on reducing utility costs by improving the efficiency of HVAC systems.
28. Environmental Impact: EPA - Information on various environmental topics and their impact from the U.S. Environmental Protection Agency.
29. Boiler Upgrade Scheme: UK Government - Official site for the UK government’s Boiler Upgrade Scheme.
30. Heat Recovery System (HRS): Energy.gov - Guide on heat recovery ventilation systems and their benefits.