Yet, the truth is energy performance certificates (EPCs) are often ignored.
RICS valuers providing lenders’ mortgage valuations have been able to discount the implications of a good or poor energy rating when assessing a property’s value.
This is due to the lack of any clear evidence to show that mainstream buyers are willing to pay more for an energy efficient property than a less efficient one.
However, with energy prices continuing to climb, are we perhaps close to a tipping point, where homebuyers begin to consider energy efficiency as a significant part of their decision making process?
Certainly, the government remains committed to driving up the energy efficiency of the country’s housing stock as a means of reaching its carbon reduction commitments.
Green Deal legislation will shortly be announced to provide the means and ways to delivering greater energy efficiency to homes.
While it’s not easy to forget the mistakes of the HIPs roll out, this time the industry has been actively involved, with major lenders consulting with DECC and CLG over the last 12 months.
As TCF continues to influence lending practices, Green Deal-related initiatives are likely to become mainstream, rather than the preserve of more specialist lenders.
In fact, major lenders appear ready to act as soon as the new legislative framework is announced.
So what could happen?
As well as specific Green Deal finance, it seems likely that we’ll see a range of ‘green mortgage’ top-up products of £5,000 to £10,000 made available to new and existing borrowers.
Paired with attractive rates, the long-term repayment plan of a mortgage, a list of government-accredited contractors and potential guarantees, mortgage customers may not be so quick to dismiss them.
Opportunities are already arising and industry-wide preparations are underway, including the ‘Red Book’ aka RICS Valuation Standards.
In this, the Residential Mortgage Specification, effective May 2011, specifically states the EPC should be considered by valuers – a significant green-focused change from the 2010 guidelines that required valuers to ignore the EPC.
However, RICS valuers do not drive the market, but reflect transactional evidence and tone.
Therefore, as buyers begin to realise there may be merit in paying a slightly higher price for a green home, evidence will become available and a differential may quickly develop between low and highly energy efficient properties.
After all, history tends to repeat itself and we’ve seen examples of innovation affecting value in past years, such as the introduction of central heating and double glazing.
Green technology could be the next big influencing factor and, for RICS valuers, the Red Book is looking distinctly greener.
Paul Cutbill is professional development manager of surveying services at Countrywide
