Energy costs are increasingly becoming part of homebuyers’ affordability assessments, even though few are willing to pay significantly more for an energy-efficient property, said LRG.
The firm’s survey of more than 700 buyers and sellers found that 85% of prospective purchasers considered energy efficiency important when choosing a home. However, just 2% said they would pay significantly more for a property with better energy performance, while 26% would pay a little more.
More than a third said they would only pay a higher purchase price if the additional cost was offset by lower energy bills over time, while 37% said they would not pay any extra at all.
According to the research, the difference in annual energy bills between a typical three-bedroom semi-detached home with an Energy Performance Certificate (EPC) rating of C and one rated D is around £663, equivalent to roughly £55 per month.
LRG said this monthly saving is comparable to the repayment cost of around £10,000 of additional mortgage borrowing over 25 years at current fixed rate levels, highlighting how buyers may weigh running costs against purchase price when assessing affordability.
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The research comes after Ofgem’s energy price cap increased by 13% on 1 July, adding around £18 per month to the typical household energy bill.
Neil Louth, group executive director at LRG and chief executive of The Acorn Group, said buyers were becoming more informed about the ongoing costs associated with owning a property.
The survey also found buyers want more information about ongoing property costs during the home buying process, including details about heating systems, boiler age and likely energy bills.
Louth added: “This research tells us buyers aren’t paying for an EPC certificate. They’re paying for what it means to their monthly finances.
“If two similar homes are available, the one that’s cheaper to run is becoming the easier decision. That’s where energy efficiency has real value.
“The green premium may be a myth, but the cost of poor efficiency certainly isn’t. Sellers shouldn’t expect an energy-efficient home to command a huge premium, but equally, they shouldn’t underestimate how quickly buyers will use higher running costs to negotiate. In today’s market, that’s a conversation worth having before a property even goes on sale.”
