Mon 04 Apr 2022
Paul Bennett, Director
While the cost of gas and electricity from 1st April feels like a very cruel joke, the reality is all of us will be paying more for fuel for the foreseeable future. When it comes to property, aspects such as good insulation and modern heating systems were merely ‘nice to have’ but now they’re ‘must include’ for the home moving masses.
Securing a ‘green property’ has been gaining in relevance for some years now. When we look back to 2017 and a report conducted by the housebuilder Redrow, we can see that 63% of would-be homeowners wanted to purchase an environmentally friendly home. In addition, 82% would have paid more for a property that facilitated a greener lifestyle and 25% of buyers would have paid at least a 6% premium for a home with sustainable features.
Fast forward to today and we’d love to see the results if the same survey was run in April 2022. Not only are movers more sustainably minded – looking to minimise their carbon footprint and be kinder to the environment – they’re looking for a home where energy efficiency measures will reduce their utility bills.
Therefore, the timing of two, new Government initiatives couldn’t be better. The Chancellor used his Spring Statement to announce that VAT will no longer be applied to energy-saving materials from the beginning of April 2022. Previously, the purchase of items including solar panels and heat pumps were subject to a 5% tax but this will be reduced to zero for the next five years.
As well as savings on more ambitious energy-saving projects, zero VAT will also apply to more common property installations and upgrades. No VAT will be added when people buy loft insulation, thermostatic radiator valves, central heating timers and controls, pipe lagging and draught stripping. The Government did, however, outline what energy saving products are still liable for VAT, and these include most boilers, secondary or double glazing and energy-efficient fridge freezers.
Also starting in April this year is the Government’s new Boiler Upgrade Scheme. A pot of money worth £450 million has been made available to the general public, designed to fund the switch from traditional gas and oil-fired boilers to heat pumps.
A grant of £5,000 towards the installation of a new air source heat pump - or £6,000 if the intention is to install a ground source heat pump - is now available, with affiliated installers applying for the grant on behalf of their client, then deducting the amount off the final bill.
The assistance is limited, however, as the £450 million fund will only stretch to 90,000 homes, and it’s doubtful that each grant will cover the entire cost of buying and installing a heat pump. Nevertheless, 50% off the cost of a heat pump isn’t to be sniffed at, and property owners looking to take advantage of the grant should find a participating installer as soon as possible as the grant is available on a ‘first come, first served’ basis.
While it may feel that improving your property’s energy performance revolves around a financial outlay, there is a bigger picture for both homeowners and landlords. A report by the Department of Energy and Climate Change (DECC) in 2013 found that making energy saving improvements to a home ‘could increase its value by 14% on average and up to 38% in some regions’. Much has changed since then and as with the Redrow survey, if the same research was conducted now, Behr & Butchoff is confident that eco improvements would add even more value.
As for landlords, the cost of not offering tenants an energy efficiency property is more black and white. Currently, rental homes have to have an EPC of at least an E to be considered legal and this benchmark is set to rise to C for all lets by 2028 - and maybe even a B by 2030, if Government plans come to full fruition.
If you would like advice pertaining to a property’s EPC rating – whether it’s a home you want to sell, buy or rent – please contact the Behr & Butchoff team.