Tenants prepared to pay more for energy efficient homes

Tenants are willing to pay a 13% premium for an energy efficient home as low carbon homes with sustainable features become more important than the size of the property, research reveals.

Legal & General Capital say their findings will help landlords, local authorities, developers and registered providers wanting to invest in environmentally friendly properties.

The firm adds that homebuyers are willing to pay a 10.5% premium for a low carbon property, with Generation Z future buyers willing to pay 20%.

Helping to boost interest in eco homes

The insurance firm points to energy price chaos over the past year and the UK’s continued reliance on fossil fuels for helping to boost interest in eco homes.

And with the government’s energy price cap expected to be lifted for all but the poorest households next April, all households will see their energy bills continuing to rise.

These prices are projected to account for 11% of household income – which would be a historic high.

This means that both tenants and house buyers are prepared to pay a premium for energy efficient, sustainable housing.

One in three people ‘clearly’ understand Energy Performance Certificates

However, the research also reveals that despite growing consumer appetite for eco homes, just one in three people ‘clearly’ understand Energy Performance Certificates (EPCs) for determining energy efficiency.

This highlights, Legal & General says, that more clarity is needed about what makes a home energy efficient to help boost interest.

John Alker, the firm’s head of sustainability, said: “Climate change and energy efficiency have risen right up the agenda for many people when choosing a home.

“With buyers and renters prepared to pay a 10.5% and 13% premium respectively, energy efficiency and sustainability in homes make a material difference to the consumer.”

‘Research also shows that clarity is key’

He added: “The research also shows that clarity is key when it comes to low carbon and energy efficiency.

“Energy Performance Certificates are not well understood — they need reforming to better reflect real world energy consumption and to help incentivise the adoption of low-carbon technology.”

Simon Century, the director of housing at Legal & General Capital, said: “Approximately one-fifth of the UK’s carbon emissions come from homes.

“Legal & General’s research shows that location, good insulation and lower energy bills are the top three general criteria when selecting a property.

“For the first time, energy efficiency is now as important as the size of the property, a welcome change to the way consumers think about buying a home.”