In fact, the ‘Green home premium’ is worth up to £40,000 when comparing an Energy Performance Certificate (EPC) A-rated home to one that’s rated G, according to the Halifax. Even moving your home from a D rating to a C will typically boost the price by about 2% – the equivalent of about £5,000.
Retrofitting undoubtedly adds value – whether you plan to move or just improve. So, if you’re ready to take the plunge and get an energy assessment, it’s reasonable to question how you’re going to pay for any resulting work. For many homeowners, this is a big stumbling block, as a recent study from Cornerstone Tax revealed that 45% of them have looked into making their home more energy efficient but found it too expensive without support.
Not that long ago, the government looked to be on the case, launching their Green Homes Grant to offer homeowners and residential landlords a £5,000 voucher towards the cost of installing energy efficient improvements. However, the scheme petered out last year amid criticism that it was hard to source authorised tradespeople and get work done in the available timeframe. As yet, there hasn’t been a direct replacement and there are remarkably few grants available for anyone wanting to fund their green improvements.
One of the few incentives – the Renewable Heat Incentive which offers incentives for homeowners who install air source heat pumps and biomass boilers – is unfortunately only running until the end of March. In April, the Boiler Upgrade Scheme – or Clean Heat Grant – launches, aiming to help fund the UK’s transition from gas boilers to low-carbon alternatives. Home-owners can get £5,000 towards installing an air source heat pump and £6,000 towards a ground source heat pump. However, the fund doesn’t cover the rest of the wide-ranging retrofit work and equipment available out there.
There is also Energy Company Obligation (ECO) Funding, a government energy efficiency scheme to help reduce carbon emissions and tackle fuel poverty – first introduced in 2013 – whereby energy suppliers fund the installation of energy efficiency measures. This mainly covers people claiming benefits or living in social housing.
With stop-start government initiatives, the answer to the funding question instead looks likely to come from the private sector. We’re already seeing this in the property market where buyers are being offered green mortgages which provide lower interest rates or cashback. There are also signs that fixed-rate deals might emerge where, for example, the rate you pay within the fixed period comes down if you carry out certain green home improvements.
Achieving the government’s ambition for as many homes as possible to reach EPC C by 2035 will need imaginative carrots as well as sticks, and there should soon be more incentives on the horizon. The Environmental Audit Committee has called for VAT on retrofit work to be cut from its current rate of 20% to help homeowners with the cost of retrofitting and, more significantly, the government recently announced its £10 million Green Finance Accelerator programme which launches in the spring. This aims to encourage firms to come up with innovative green finance products to incentivise domestic energy performance improvements and could result in more low interest, home improvement loans becoming available for retrofit work. Another interesting concept has been suggested by the Energy Efficiency Infrastructure Group, which is campaigning for a rebate on Stamp Duty for homeowners undertaking energy efficiency improvements to their homes.
As the issue becomes more mainstream, the path to retrofitting will certainly become smoother and we’ll see even more solutions as demand for work and materials increases. After all, desire has driven accelerated innovation and lower prices in other sectors; solar panels are becoming cheaper and more efficient in the way that mobile phones have done. (Who can forget those first hefty phone ‘bricks’ that cost an eye-watering £3,000?)
The current hike in electricity prices makes the investment in solar PV even more attractive. With the closure of the Feed in Tariff, where the government rewarded you for investing in solar PV and people made a good return, it is now very much a case of becoming more self-sufficient, by generating and using your own electricity.
Excuse the pun, but the energy efficiency market is really hotting up.