An EPC is an abbreviation of ‘Energy Performance Certificate;’ something that all homes, that are on the UK market, must have by law since 2008 (2009 in Scotland).
EPC’s are an indicator as to a home’s energy efficiencies and are intended to give potential buyers an indication as to the running costs of a property and what they might need to invest to improve its rating.
EPC’s were introduced in the UK in recognition of a need to improve the energy efficiency of much of the UK’s housing stock – which, compared to mainland Europe, have a relatively poor energy and thermal retention performance. There is no ‘pass’ or ‘fail;’ ratings are simply assessed from ‘A’ to ‘G’ with ‘A’ being the best performance that one can expect.
For a new-build property or even a self-build project, an EPC is certainly worthy of consideration and can attract one of the new ‘Green’ mortgage products. Such products can carry a preferential rate of interest. However, with the UK having a high percentage of older housing stock – combined with a demand that far out-strips supply, the ‘EPC’ has failed to make a huge impact on property values. Whilst many homes of up to 60 years old (From late 50’s early 1960’s) can be improved with double-glazing, cavity wall insulation and even solar panels, for older properties such improvements can prove either difficult or just not possible. For example, many older properties don’t have cavity walls which makes insulating the walls – one of the biggest factors to retaining heat – not possible. Similarly, for listed properties and homes within a conservation area, such improvements are not permitted.
Despite an often lower than C – EPC rating homebuyers are still willing to pay a premium for attractive listed, historic town houses, farmhouses and cottages in sort after, photogenic villages, towns and cities. Buyes view it very much as a trade off between character and a preferred way of life VS lower energy bills.
Such homes can still benefit from other energy reducing concepts such as the possibility of drylining and insulating the internal walls and looking at such things as carbon neutral range cookers linked, via centralisers, to a heating stove - to also supply domestic hot water and power radiators. It’s very much a matter of ‘thinking outside the box!’
Whilst EPC’s shouldn’t necessarily be ignored, one also needs to take into account the credibility of such a report. For example assessments do not take into account how many people live in the property which has an obvious impact on energy use and assessors cannot conduct invasive assessments such as drilling into walls or ceilings to check for insulation; to a certain extent, they must base a good portion of their assessment on assumptions and the information relayed to them by the property holder!
Whilst an EPC can provide you with useful information, we wouldn’t recommend that you base your purchasing decision on an EPC alone; it’s more about the ‘sum of its parts.’ This means that besides an EPC, you need to consider value for money, location and the potential to add value and improve.
If you are interested in an older property that’s habitable but needs improvements, there are specific ‘Renovation Mortgages’ that will allow you to borrow between 80 and 90% of its current market value. In certain and more limited circumstances, there are mortgages available for non-habitable properties although these normally carry a smaller LTV and you also need to consider additional costs such as renting whilst you renovate.
For further information talk to independent mortgage specialist – Dunham McCarthy.
