According to Santander’s “Buying into the green homes revolution” report, which surveyed 2,300 homebuyers, owners, estate agents and mortgage brokers, this is equivalent to an increase of £26,600 based on the average house price of £283,000.
The lender noted that this was more than double the average £10,000 cost of making energy efficient upgrades to a property.
Estate agents surveyed added that buyers paid an average 15.5 per cent more for a home that met higher energy efficiency standards, and over a third said buyers were paying more than 20 per cent more.
The majority of estate agents, 79 per cent, said that they had seen heightened interest from buyers about energy efficiency, with more asking about it than 12 months prior.
The report added that energy efficiency is one of the most desirable features of a home, along with a bigger garden and a home office.
Over a third of buyers, 36 per cent, said they would invest in a more energy efficient boiler when making home improvements.
Energy efficiency knowledge gap
However, the report said that while consumers were aware of the benefits there was a knowledge gap in understanding what was needed to make their homes more energy efficient.
Santander said that as part of net zero targets the government aimed to get all homes to an Energy Performance Certificate (EPC) of C or higher by 2035, but currently only one third of homes meet this target. This means 19m homes could need retrofitting.
Over half, 58 per cent, of consumers did not know what an EPC stood for, and 60 per cent did not know their own rating.
Estate agents added that it took them up to four months longer to sell a property with a poorer EPC rating.
Graham Sellar, head of mortgages at Santander UK, said: “There appears to be a clear increase in the desirability of energy efficient properties as people face the reality of rapidly increasing energy bills, with today’s buyers more likely to pay a premium for a retrofit than a fitted kitchen.
“But there is a huge amount of work to be done to ensure homeowners understand the changes they need to make and the importance of both the economic and environmental benefits of making them. Lenders, government, construction companies and others in the housing industry need to come together to support people and policies that will drive forward widespread change.”
Recommendations to meet net zero
Santander said that in order to meet its net zero targets the government should enhance it existing EPC ratings framework to develop a more “robust and accurate energy performance certification scheme”.
It added that EPC rating need to be independently verified, more consumer friendly and regularly updated and an easily accessible central database created.
The bank also called for a “standardized toolkit” backed by the Energy Savings Trust to give to consumers at financing and refinancing stages, along with a government campaign to raise awareness of the resource.
Santander said that taxation should be explored as a way to drive demand, such as stamp duty rebates for homebuyers investing in retrofitting property.
It called for a “clear and realistic timeline” for improving minimum energy efficiency standards for domestic private rented and owner-occupied property.
The bank also urged the government to create a new qualification for retrofitting and decarbonization of buildings, along with a kick starter scheme for green skills to help newly qualified retrofitters gain experience.
This would create necessary the skill infrastructure and capacity to retrofit at scale, it said.
