Article
Energy Performance Certificate: The key to a greener home, but at what cost?
March 14, 2025 8 Minute Read
Around two-thirds of owner-occupied homes in the England and Wales are classed as ‘inefficient’, according to government data, in that they have an Energy Performance Certificate (EPC) rating of D or lower. Altogether this amounts to almost seven million homes. And unlike the social and private rented sectors (which are required to have a valid EPC certificate with a rating of at least C by 2030), owner occupiers are not currently subject to any EPC regulation. Moreover, according to our latest CBRE Consumer Survey, only 15% of homeowners plan to refurbish their homes specifically to reduce energy costs and/or the environmental impact of their homes. Albeit this is higher than the 11% we reported in last year’s survey.
The benefits of energy efficiency improvements
Improving the energy efficiency of our homes is crucial in meeting the Government’s net zero target. Every owner occupied home that is improved to an EPC rating of C would save an average of 1.7 tonnes of carbon per year. Upgrading an EPC D rated home will save around one tonne of carbon emissions per year, and this increases to approximately four tonnes for EPC E-G rated homes. This means that if all the eligible owner-occupied homes were upgraded, it could reduce the UK’s carbon emissions by almost 13 million tonnes per year. That equates to taking three million cars off the road. As well as the wider environmental benefits, there can be significant energy cost savings – these average £280 per year, ranging from £180 for a D rated properties, to almost £800 for E-G rated homes – so why aren’t more homeowners keen to upgrade?
Homeowner attitudes towards energy efficiency
The substantial cost of upgrading a home is likely to be a factor. The English Housing Survey reports that the cost of upgrading an EPC D rated home to an EPC C is approximately £6,000. This rises to more than £12,000 for an EPC rating E home, and £17,000 for those homes with an EPC rating of F or G. This cost was also illustrated by Rightmove’s Greener Homes Report 2024, which highlighted the emergence of a ‘green wealth divide’, with environmental home improvements more likely to be made to higher-valued properties. Our survey also revealed that, of those who were looking to upgrade, there was a clear weighting towards higher earners. Overall, 55% of those planning refurbishments earn more than £75,000 per year. However, 90% of employees earn less than this, with earnings in the UK averaging just over £38,000 per year.
As such our survey shows that homeowners want to upgrade their properties but are constrained financially. The NatWest Greener Homes Attitude Tracker found that 68% of respondents without plans to make sustainable improvements to their home cited cost as the reason. Rightmove’s report also found that almost 80% of homeowners would make energy efficiency upgrades if they had the money or access to Government grants or incentives. It is therefore crucial that the Government offers adequate support to homeowners and drive forward green home improvements.
Figure 1: Are you planning on doing refurbishment/extension to your property?
Government support for energy performance certificates
The £1.5 billion Green Homes Grant, launched in September 2020 and famously abandoned six months later, offers learnings on how to better plan and execute future schemes. Homeowners and landlords using the scheme reported extreme delays in processing applications, a shortage of engineers to carry out the work, and a complex and bureaucratic process that made uptake limited. As a result, only 47,500 homes out of the 600,000 originally intended were upgraded to more energy efficient homes. This highlights the necessity for a simple application process and effective promotion and education around any future schemes. Public-private partnerships can also leverage additional resources and expertise.
Positively, there have already been steps forward by the Government, with up to 300,000 homes set to benefit from upgrades as part of the Warm Homes Plan this year. Albeit this only equates to 3% of households rated below an EPC C in England. Furthermore, much of the funding through the Warm Homes Plan is targeted towards social housing. With the wealthy able to pay for upgrades themselves, this leaves a group in the middle who are owner occupiers, but not wealthy enough to pay for the upgrades. The Government are also removing the ‘1m rule’ from planning legislation (which requires heat pumps to be installed at least one metre from a property’s boundary). This will make it easier for homeowners to install heat pumps, and follows Octopus Energy’s report that 34% of those who order a heat pump refrain from installation due to planning permission reasons.
The Warm Homes: Local Grant is also a new UK government-funded scheme that will come into effect in April 2025, which targets low-income, privately owned households with an EPC rating below a C. This scheme has been allocated £500 million as part of the Autumn budget and will cover up to £30,000 per property for energy efficient upgrades such as insulation and low-carbon heating. Local authorities can also tailor this scheme, ensuring that resources are allocated effectively and reach those most in need. Additionally, the Government is consulting on reforms to the Energy Performance of Buildings regime, which will introduce more accurate and useful energy efficiency metrics and improved data management, aiming to incentivise investment in energy efficiency improvements.
The way forward
The Government has some promising initiatives to help homeowners upgrade their homes to energy efficient ones. However, it is crucial that lessons are learnt from the failed Green Homes Grant, to ensure their successful implementation and execution. It remains to be seen whether funding is directed to the right places and if it will be adequate to avoid exacerbating existing disparities in the energy efficiency of owner-occupied homes across the country. Increasing the budget of existing schemes, expanding the eligibility criteria, introducing new incentives, and offering free energy audits and technical assistance are all ways in which help with energy bills can be provided to more households across the UK.
Regardless of this, upgrading to EPC C reduces emissions, but it doesn’t eradicate them. Even if all the required housing stock was upgraded to an EPC C, they would still collectively be emitting around 80 million tonnes of carbon per year. This is more than double the annual carbon emissions of Sweden. Eliminating this volume of carbon emissions relies on replacing fossil fuel heating systems. We are already on this journey with £1.5 billion committed to promoting heat pumps through the Boiler Upgrade Scheme, and a potential gas boiler phase out during the 2030s. However, there is still a long way to go to reach net zero for the UK’s housing stock.
Contacts
Katie Banks
Research Analyst
Related Services
Transform your real estate assets and achieve your sustainability aspirations with our innovative solutions.
Unlock the potential of your residential real estate with expert investment, financing, valuation, agency and design strategies.