15 million homes need energy efficiency upgrades

They may have seen a boom in prices during the pandemic, but detached homes could be costing their owners thousands of pounds in extra fuel costs, according to analysis by Halifax.

While lockdown has prompted a ‘race for space’ amongst home movers, the wider cost implications of owning a detached or period home may not have been so obvious. Yet these homeowners face some of the biggest energy cost increases following the fuel cap rise and the most work to make homes more energy efficient.

Modern construction standards have pushed the energy efficiency of homes upward rapidly: the average EPC rating for home built since 2012 is B or higher, compared to the average rating for all homes in England and Wales of D. For the 4.2 million homes built before 1900, the average EPC rating is only E.

Construction methods

One of the key differences between older and newer homes that affects energy efficiency is how they are designed to deal with damp. In older homes, ventilation between floors and ceilings and under roofs is how moisture is dealt with, which in turn means poor heat retention. Modern homes favour damp-proofing under solid block floors.

Other differences include little or no insulation in floors, walls, and ceilings, single glazed windows, open fire places and lower standards of construction in key areas like doors and windows causing draughts.

Overall, it is estimated that around a quarter of heat loss from poorly insulated homes is through roofs, a third through external walls, another quarter through doors and windows, and the rest through floors. 

Heat lost from homes varies depending on not just the construction but type of property. Flats are the only type of home that, on average, achieve an EPC rating of at least C. This variation between types of home is thrown in to stark contrast when the proportion of new and existing homes that achieve a ‘C rating’ are compared:

Andrew Asaam, Mortgages Director, Halifax, said:“The 50% increase in the fuel cost cap is going to have an impact on everyone’s energy bills, in all but the most modern homes that impact is going to be significantly more.

“The majority of our homes fall short of the average C rating the Government aspires to, which means we’re wasting money and harming the environment heating our homes. Further fuel price increases are only going to mean we’re spending more to live in colder homes unless we act.

“We recognise that the cost of making these improvements is not inconsiderable for most and the rising cost of living means making these investments now will be difficult for many. We hope that our Green Living Reward cashback offer will help encourage and support some of those homeowners who want to make their homes more energy efficient.

“For the owners of the 15million homes currently below C, there are significant benefits in making energy efficiency improvements through lower fuel bills, warmer homes and increasing the value of their home. Investing in these upgrades now could more than pay for themselves; both environmentally and financially, in the future.”

Improving Homes

It’s estimated that moving up one EPC rating band could save around £250 per year on average, which means the payback for any improvements would appear to be over several years, but the financial benefits are much greater. Energy efficient homes attract a price premium compared to other homes when they come to be sold, Halifax found. The ‘Green home premium’ is worth up to £40,000 when comparing an A-rated home to one at G.

What improvements to make on a home for the greatest energy efficiency savings or the most cost effective is specific to the property. Halifax provides a free online Energy Saving Tool to help owners understand the changes they could make and how much they could save from lower bills.

The bank has also partnered with the Energy Saving Trust to provide free, impartial advice and guidance to help homeowners better understand how they can make their homes warmer and greener. The Home Energy Efficiency Helpline, 0808 196 8258, is open Monday to Friday 9am – 5pm (except public holidays).

For those ready to make energy efficiency improvements and financing them through borrowing, they could benefit from up to £1000 cashback, for installing a heat source pump, or £500 for other energy efficiency home improvements. The benefit is available not just to those buying a home but also existing and remortgage customers who are looking to finance green home improvements. (More details available at: Green Living Reward | Halifax).