26 Oct 2011

Does it pay to be Energy Efficient?

Does it pay to be Energy Efficient?

Claire Ogston, Senior Solicitor, discusses the incentives available and those being proposed, which are designed to improve the energy efficiency of our homes.

Claire Ogston, Senior Solicitor, discusses the incentives available and those being proposed, which are designed to improve the energy efficiency of our homes.

With the cost of Gas and Electricity constantly increasing, are there any incentives out there to make it worth your while buying a more energy efficient home?

In his final budget as Chancellor, Gordon Brown announced that stamp duty would be scrapped on all new properties worth up to £500,000 which were given a zero carbon rating.  However the high profile scheme was deemed a failure with only 24 homebuyers taking advantage of the scheme by January last year.  The problem is that so few homes would actually qualify for the exemption and buyers of 'second hand' properties would not qualify at all for the relief.  In order to achieve a zero carbon rating a property must not consume any fossil fuels for heat or power and use renewable energy instead to power its needs.  These impractical requirements have meant that very few new properties have achieved the zero carbon status.

However it has brought the subject of energy efficient homes to the forefront and it is highly likely that in the coming years more and more developers will strive to achieve a greener ethos in their developments.  

Perhaps it is more useful then to consider what incentives are available to make existing housing stock more energy efficient and whether doing so in turn makes them a more attractive option for a discerning purchaser. 

The vast majority of CO2 emissions in the UK come from older properties and it is therefore important to look at measures which may assist in reducing the carbon ratings of existing housing stock in the UK. 

Measures such as double-glazing, loft and cavity insulation, heat pumps and even energy efficient light bulbs are all available, but at what cost?  Many of these measures can be expensive to install and home owners might struggle to see the benefit straight away. 

However proposals are in place to introduce the 'Green Deal'.  Set to launch in April 2012 it is designed to enable many households to improve the energy efficiency of their property.  The government are to implement a new finance mechanism enabling the cost of energy efficient measures to be installed and to be paid back via the savings gained on energy bills. In addition to this, the Department of Energy and Climate Change (DECC) have announced the launch of the 'Renewable Heat Incentive' Scheme.  Available to households by October 2012 it will help people to cover the costs of installing green heating systems in their homes.  In return homeowners will take part in studies to monitor the outcome and enable the government, manufacturers and consumers to better understand how to get the most out of the technology. 

It may also surprise you to learn that a limited number of mortgage lenders already offer so-called 'green mortgages'.  Householders can receive discount on the lender's standard variable rate if the home being secured is energy efficient or the borrowers are using the funds to invest in energy efficient improvements.  Some also factor in reduced fuel bills into their affordability calculations allowing buyers to take out bigger loans.  Although the amount of lenders offering such deals is very limited at present, with the government determined to tackle climate change and the ever increasing costs of traditional fossil fuels this could just be the start.

Whilst many buyers may not pay much heed at present to the Energy Performance Certificate which forms part of the Home Report for each property currently on the market, it appears times could be changing.  Energy saving measures implemented now could increase the value of the property and also be a safeguard against future energy prices.  This could make more energy efficient properties more desirable to prospective purchasers and with a recent Energy Saving Trust survey suggesting that up to 70% of people would consider renegotiating the price of a property if they discovered it was inefficient, its perhaps time to re-evaluate the importance of an energy efficient home.

Claire Ogston, Senior Solicitor

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