How promoting energy efficiency affects the sale and rental of new homes

As energy prices have increased, and the impact of climate change has become more apparent, consumer demands and preferences have changed. Consumers now expect to have homes that are more sustainable and energy efficient. They want to do their part to reduce the impact of climate change by reducing their energy consumption and carbon emissions.

And of course no one wants to spend more than they have to, so they also want to enjoy the financial benefits of a more energy efficient home.

As with cars, they are actively looking for homes that are greener, more sustainable, use less energy and have lower utility bills.

Importantly, market research shows that they are willing to pay more to buy or rent these homes and they will prefer these over similar homes that are less green and efficient, representing an opportunity for house builders and developers to differentiate themselves and their homes and increase sales and profits.

Lower energy costs sell or rent more homes

A Harris Interactive poll of over 2,000 people found that nearly half (49%) consider eco-friendly features more important than luxury items in a home (31%).

According to research by the CSIRO and Common Capital for the Cooperative Research Centre (CRC) for Low Carbon Living’s EnergyFit Homes project, 89% of consumers said that an energy-efficient home would be more attractive to buy or rent.

Furthermore, 92% of housing consumers would like information on the energy efficiency of homes as part of sale and rental processes.

Over 55% of consumers said that energy efficiency was an important factor in deciding what home to buy and they would be put off from buying an inefficient home according to a survey by lightbulbs direct.

Sustainable or green homes command higher sales and rental prices

Over a third (36%) of UK adults have revealed they would be prepared to spend up to £15,000 extra on an energy efficient property according to the lightbulbs direct research mentioned above.

From a Mcgraw Hill Construction report, 73% of single-family builders and 68% of multifamily builders say consumers will pay more for green homes.

Adding green features to a house can add more than $137,000 (£75,000) to the sales price and $43,000 (£24,000) if you’re selling an environmentally-friendly apartment according to PRD Nationwide.

Solar panels, solar heated hot water, water tanks and grey waste water systems all add approximately 29 to 33 per cent to house asking prices compared to the area’s median.

Based on average property prices in England, MoneySuperMarket were able to see a correlation between an increased energy efficiency rating and higher house prices. As the graph below shows, the price increase for EPC A rated houses can be as much as 14 per cent.

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New homes significantly reduce energy costs and consumption compared to existing homes

A new home built to the latest building regulations can cost half as much to heat as a Victorian house of the same size, according to a report by the NHBC Foundation.

The report shows that energy bills are expected to be around £440 lower in a modern one-bedroom ground floor flat, compared to its Victorian equivalent. And for a new build four-bedroom detached house, bills are estimated at £1,050 – saving £1,400 compared to those of a 19th century house.

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Most house builders and property developers are not promoting the improved energy efficiency of new homes. Why?

With such a strong consumer-led push for green homes, it seems that property developers and house builders just need to showcase the environmental credentials of their properties to make more money.

Looking at the websites of house builders or property developers, this is often not evident. There is little or no information about how efficient these houses are. There is little or no information about what cost saving features that they might have added to make their homes more sustainable and reduce energy consumption and costs.

Some level of education is also required. 40% of people in the lightbulbs direct survey admitted to “not knowing what the EPC rating stands for”, for example.

Case study: failure to promote energy efficiency is a missed opportunity

House builders and property developers should make clear the energy efficiency of the properties they are selling or renting.

Looking at my local area for example, I compared two homes that are for sale – one an existing house via an estate agent and the second a new home direct from the developer.

They were both the same price and same size but the existing 3 bedroom semi-detached house has an EPC rating of D and estimated current energy costs of £2,538 per year.

On the other hand, the EPC rating for the new 3 bedroom semi-detached house is not readily visible and there is no indication of the energy usage and costs.

However, it was possible to use the EPC Register and look at the same house type on the same site to find that this home would have an EPC B rating and the predicted annual energy costs would be £1,332 — almost half those of the existing property. Over the 25 year period of a mortgage, this represents over £30,000 difference even without factoring in increases in energy costs (bearing in mind that the average energy bill has increased from £500 in 2004 to £1300 last year according to Ofgem).

So why is this not being more clearly communicated when there is clearly consumer interest in having more efficient homes and lower energy costs? It would take little effort and could deliver significant benefits to the developer bottom line.

Going a step further

While new homes are already significantly better than existing homes in terms of energy efficiency, it is possible to go even further.

Looking at the proportion of homes sold for different EPC energy performance ratings, we see that almost no new build homes (or existing homes for that matter) achieve the top A performance category.

Clearly there is more that can be done and in fact the EPC report suggests what these steps could be — adding a small number of solar panels and solar assisted hot water heating would convert the new build B rated home to an A rated home and increase its attractiveness and value to consumers.

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It is possible to go further still and have a home that is net-zero i.e. a home that generates as much energy in a year as it consumes and near zero energy bills.

Adding intelligent home controls such as those offered by Wondrwall can reduce energy consumption by 20%. Adding solar panels and batteries to a home, linked to that intelligent home automation platform, as with the Wondrwall Energy solution, will reduce energy bills by 90% to almost zero and enable a net-zero home.

The energy savings alone could be worth approximately £10,000 over a ten year period without taking in to account the other benefits and the value of having an environmentally friendly home.


Promoting the energy efficiency of new homes and specific features that make the home more efficient, such as the type of insulation, the type of energy efficient heating, advanced features such as intelligent heating controls that reduce energy consumption, solar panels that generate their own energy or batteries that reduce energy costs, will make a home more attractive compared to less energy efficient homes and motivate consumers to pay more to buy or rent these homes.

And given that it costs nothing to promote the energy efficiency of new homes over existing ones, and the cost to convert a B rated new home to an A rated one can be as little as £6,000, it is financially viable to implement.