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Eco Homes for Green Minded Homebuyers

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Having recently endured temperatures hitting 40 degrees, buyers with an eye on their environmental impact are increasingly looking for eco homes.

There’s a combination of contrary forces which make choices difficult for purchasers wanting to do the right thing and buy a more energy-efficient new home, but who have to stick to a budget at a time when inflation and fuel bills are soaring.

Should you pay more for a modern property designed to be energy efficient, or go for a possibly cheaper older property which could be retrofitted with eco-features?

I’m giving this spoiler alert up front – there’s no absolute solution to this problem.

However, I want to give ideas of the options available to green-minded homebuyers.

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Energy performance certificates

An EPC, which must be legally provided with each home on sale or for rent, gives a snapshot of the energy efficiency of a home you might be considering.

These are becoming more important in the housing market. Research by an estate agency this spring, showed 32 per cent of buyers admitting they pay more attention to EPCs now than they have during previous house purchases.

Between October and December 2021 – the latest data available – 84 per cent of new build homes had an A or B rating on their EPC. These are the top ratings for energy efficiency.

By contrast, 81 per cent of older homes had a C or D rating and only four per cent A or B rating. Even worse, 15 per cent of older homes had particularly poor E, F or G ratings on EPCs.

But it’s not a slam dunk for new homes, especially in a cost-of-living crisis.

Price differences between new and older homes

Data from HM Land Registry, which records all housing sales information, shows that in the year to April older homes increased in value by an average 8.6 per cent in the previous year. A typical older home cost £264,684 to buy.

But contrast that with a new, typically more eco home: its typical cost was £367,219 and that followed an eye-watering 25.4 per cent annual rise, caused partly by high demand but also because of a shortage of materials and labour in the construction industry.

Could the £100,000 difference transform an older home into an eco-friendly place to live?

Is retrofitting the answer to creating eco homes?

There are lots of ways an older home can have its energy efficiency improved, and some councils offer homeowners small grants to help with the cost.

There’s the installation of double or triple glazing, upgrading to a more efficient heating system, extra insulation in the roof, floor and walls, smart technology, filling gaps in floorboards, and even the replacement of older light fittings with LEDs. More ambitious owners could try solar panels or small home turbines in the back garden.

Costs vary according to the age, size, and nature of the older home, but you would undoubtedly achieve most of these for well under the £100,000 new-old price difference.

Other factors to consider

Buying on a budget now, in the current economic climate, may not allow for much long-term thinking but do bear in mind re-sale values and overall returns on your purchase.

Firstly, there are long-term price gains for eco homes with a good A or B-rated EPC, whether the house is new or old. A study by the Nationwide mortgage lender last year found buyers paid an average 1.7 per cent more for an A or B home than for a D-rated property, and they paid 3.5 per cent more than they would for a similar F or G-rated house.

Secondly, remember that a new home carries a price premium to start with so you may not see much capital appreciation if you want to sell in just two or three years.

And thirdly on an older property some large-scale enhancements, like solar panels or heat pumps, may not pay for themselves through savings on fuel bills for a decade or more.

No easy choices

We’ve covered a lot of options and I did warn you that there was no definite answer to the conundrum of which type of property was best or most cost-effective for energy efficiency!

The only certainty is that the summer of 2022 demonstrates that we need to make our homes as Green as possible to contribute to Net Zero targets – and this autumn is likely to show us that our wallets will benefit too.

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Last Updated: August 22nd, 2023

Phil Spencer

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