Brits prepared to cough up more for energy efficient homes as living costs bite

Prospective homeowners are prepared to pay nearly 10 per cent more for a house that has already been retrofitted to make it more energy efficient, according to new research from Santander.

The banking group surveyed more than 2,300 UK-based homebuyers and owners, estate agents and mortgage brokers as part of its latest report, ‘Buying into the Green Homes Revolution.’

It discovered that buyers are prepared to pay a hefty green premium.

Santander calculated that house hunters are placing an average 9.4 per cent premium on dwellings that have already been retrofitted.

This equates to an average increase of £26,600 based on the average UK house price of £283,000.

This is over twice as much as the average £10,000 costs in upgrading homes to peak energy efficiency.

The support for retrofitting follows energy bills climbing to record highs and a Government support package estimated to cost over £100bn to ease prices.

Energy efficiency prized over kitchen upgrades

Meanwhile, a majority of estate agents (79 per cent) revealed they are seeing more buyers ask about energy efficiency than they were twelve months ago.  

The study found would-be buyers currently rate energy efficiency as one of the most desirable features of a home.

While there was a trend during the Covid-19 pandemic for buyers to want a bigger garden or home office, energy efficiency is now considered more attractive than these features as rising energy costs become a growing concern.

Boilers are also a prized possession, with 36 per cent of people picking an energy efficient boiler as the most likely item they would invest in for their new home.

Only 27 per cent chose the more traditional upgrade of a new kitchen, while the 2020 hot tub trend has also truly passed with only five per cent likely to invest in this. 

As part of its net zero aims, the Government is targeting all homes to have an EPC rating of C or above by 2035.

EPC confusion risks retrofit revolution

Currently just one third of UK homes meets this target, meaning an estimated 19m homes need retrofitting. 

However, more than half of respondents (58 per cent) did not know what an EPC (energy performance certificate) stood for.

Meanwhile, three in five (60 per cent) people did not know the EPC rating of the property they currently live in. 

Only 15 per cent of people would strongly agree that they have found it easy to access information about energy efficiency. 

Graham Sellar, Head of Mortgages at Santander UK commented: “There appears to be a clear increase in the desirability of energy efficient properties as people face the reality of rapidly increasing energy bills, with today’s buyers more likely to pay a premium for a retrofit than a fitted kitchen.  

“But there is a huge amount of work to be done to ensure homeowners understand the changes they need to make and the importance of both the economic and environmental benefits of making them.  Lenders, government, construction companies and others in the housing industry need to come together to support people and policies that will drive forward widespread change.”