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A B C ...spelling out the cost of energy failings

Sales of homes could be blocked if they fall short on energy efficiency, but how will this impact on residential property values in general?  Calum Innes reports.

Common sense suggests there should be a clear relationship between the energy efficiency of a building and its value so, for example, a purchaser would be prepared to pay a premium in order to achieve reduced energy costs in the future.

The drivers that influence property purchase are many and varied and, while energy efficiency is increasingly important, the relationship to value is not as clearcut as might be assumed.

The Scottish Government has just begun a consultation that could be the catalyst that crystallises the relationship between energy efficiency and value in the residential market. The proposal is that all owner-occupied domestic properties must achieve an EPC rating of C.

EPCs were introduced as a measure of energy efficiency, rating homes from A, the best, to G, the least efficient. New-build homes tend to have high EPC ratings, while older homes often have lower ratings of around D or E.

The average EPC rating for a home in the UK is D. Buildings were responsible for 28% of global energy-related CO2 emissions in 2018, according to the International Energy Agency.

The proposal, which is mooted to become effective in 2024, could oblige homeowners in Scotland to improve the energy efficiency of their property before being able to sell. If a seller is unwilling or unable to bring their home up to the required standard before sale, then the responsibility would fall on the buyer within a specific time limit.

The consultation paper indicates that 62% of homes in Scotland are owner-occupied and of these only 38% have an energy performance certificate of C or above. So there is significant scope in this sector to make improvements in the effort to achieve climate change targets.

The consultation suggests that this requirement would be imposed on all property transactions, even those for no value such as between family members, and could also be triggered by major renovations.

Of course, there will be instances where it may not be technically feasible to achieve the desired efficiency and so some checks and balances will be required.

The outcome of the consultation will be interesting and will no doubt prompt much debate, but a radical approach is needed if we are to achieve the required reduction toemissions.