Did you know that residential property accounted for over one fifth of CO2 emissions in 2020? So taking steps to reduce energy consumption in our homes is hugely important. Now the government is looking to incentivise householder investment in energy efficiency improvements by setting mortgage lending targets. We speak to property experts, Savills, about what this means for the owners of prime property.

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The challenge of improving the energy efficiency of our homes is enormous. Savills estimates that the cost to UK households of undertaking the improvements most commonly recommended in Energy Performance Certificates (EPCs) would be in the order of £330 billion.

To date, the problem has been that undertaking these improvements haven’t typically provided homeowners with a compelling return on investment. However, the landscape is changing rapidly. Energy costs are rising uncomfortably quickly and while less affluent households are at the sharp end of these increases, no-one is immune.

Policymakers, who are focused on creating a step change, are looking to mortgage lenders to influence homeowner behaviours. One route is to set banks and building societies targets for lending to directly fund improvements, while another proposal is to make it a requirement for lenders to disclose, and progressively improve, the EPC profile of their loan book.

With the stated ambition of getting the average mortgaged property to a C rating by 2030, this proposal could be a game-changer, as the availability of mortgage finance, the terms upon which it can be obtained and, ultimately, its cost, become dependent on the energy efficiency of the property on which is secured.

This direction of travel is starting to feed into buyers’ thinking too. In a recent Savills survey of buyers and sellers of prime property, a third of respondents told us that the EPC rating of a home had become a more important factor in their decision-making over the past year. 64 per cent see them as an important factor in their decision-making, and 59 per cent would be willing to pay more for a property with 75 per cent or more renewable energy. These views indicate that increasingly, investing in the energy performance of our homes will become as much about future-proofing its value as reducing running costs.

When it comes to period homes, the challenge of reducing consumption is particularly great. Our research team has looked at recently issued EPCs and found that 38 per cent of home built before 1930 have a low EPC rating of E, F or G, with the figure rising to 46 per cent of those homes constructed before 1900.

Owners of listed properties face a unique dilemma, as while EPCs have been a requirement for marketing a home for sale or letting since 2013, listed properties have been exempt where ‘compliance with minimum energy performance requirements would unacceptably alter their character or appearance’.

This exemption brings with it an exemption from existing regulations around minimum standards, including those needed to let a property. But with buyer expectations regarding the eco-credentials of prime property increasing and the green finance market evolving, so too will the benefit of investing in sympathetic improvements. The challenge for many will be in identifying what works best for the home they live in.

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Thorney Down

• Guide £1.895 million
• Alresford, SO24
• Tenure: Freehold
• Council Tax Band: G

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Broad Mead Farm

• Guide £4 million
• Newbury, RG20
• Tenure: Freehold
• Council Tax Band: G

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Street End House

• Guide £2.95 million
• Upham, SO32
• Tenure: Freehold
• Council Tax Band: H

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Churchfield

• Guide £2.5 million
• Sutton Courtenay, OX14
• Tenure: Freehold
• Council Tax Band: H

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If you’re looking to make the most of the market conditions at the moment, Savills would be delighted to advise you. Here are the contact details for their various locations across the UK:

• Liz McLean Head of Residential Savills Newbury – 01635 277 705, liz.mclean@savills.com
• Charles Elsmore-Wickens Head of Office Savills Summertown – 01865 339 702, cewickens@savills.com
• Steven Moore Head of Residential Savills Winchester – 01962 834 010, smoore@savills.com
• James McKillop Head of Residential Savills Salisbury – 01722 426 822, james.mckillop@savills.com
• Camilla Elwell London Country House Department – 020 7016 3718,  camilla.elwell@savills.com