In a recent article, we explored the connection between enhancing a property's energy efficiency and the subsequent increase in its value. Our conclusion revealed a strong correlation between these two factors; however, distinguishing the improvement in the property's perceived condition from works solely related to energy efficiency proved challenging.
In this article, we aim to delve deeper into this concept and examine it in greater detail.
In a recent article, we explored the connection between enhancing a property's energy efficiency and the subsequent increase in its value. Our conclusion revealed a strong correlation between these two factors; however, distinguishing the improvement in the property's perceived condition from works solely related to energy efficiency proved challenging.
In this article, we aim to delve deeper into this concept and examine it in greater detail.
For this article, we analysed all property sales that took place in England and Wales between 2019 and 2022, where the property had previously sold since 2010 and both sales had distinct Energy Performance Certificates (EPC).
We ensured that the size of the property on both certificates was within 5% of each other, which implied that no extensions had taken place.
Next, we utilised the Bricks&Logic Property Level House Price Index to compare the change in value between the two sales with the general change in value of comparable properties, to ascertain whether properties that had undergone energy performance improvements outperformed the overall market.
Chart 01, depicts the correlation between an improved energy efficiency score and the resulting increase in property value. The data reveals a highly linear relationship, whereby an increase of 10 points in energy efficiency leads to a marginal rise of just over 2% in property value. The data is segmented between properties that were relatively energy-efficient to begin with (D or better) and those that were highly inefficient (E or worse), and interestingly, the linear relationship between energy efficiency improvement and starting point holds true for both categories.
For this article, we analysed all property sales that took place in England and Wales between 2019 and 2022, where the property had previously sold since 2010 and both sales had distinct Energy Performance Certificates (EPC).
We ensured that the size of the property on both certificates was within 5% of each other, which implied that no extensions had taken place.
Next, we utilised the Bricks&Logic Property Level House Price Index to compare the change in value between the two sales with the general change in value of comparable properties, to ascertain whether properties that had undergone energy performance improvements outperformed the overall market.
Chart 01, depicts the correlation between an improved energy efficiency score and the resulting increase in property value. The data reveals a highly linear relationship, whereby an increase of 10 points in energy efficiency leads to a marginal rise of just over 2% in property value. The data is segmented between properties that were relatively energy-efficient to begin with (D or better) and those that were highly inefficient (E or worse), and interestingly, the linear relationship between energy efficiency improvement and starting point holds true for both categories.
In our previous article, we demonstrated that the relationship between energy efficiency and perceived condition improvement followed a similar pattern in terms of their impact on property value. Thus, we concluded that making improvements that enhance both energy efficiency and perceived condition would be the most effective way to increase property value. In this section, we will focus on exploring which types of improvements are considered to improve condition and by how much more they can increase the property value compared to other types of improvements.
During our analysis, we examined the differences in the two EPCs to identify any improvements made, which helped us gain a better understanding of what factors drove the increase in value. We categorised these improvements into four areas:
- Windows - including the installation of double glazing or improvements to existing double glazing
- Hot Water/Heating - typically consisting of a boiler upgrade, or in the best-case scenario, the installation of a heat pump and underfloor heating
- Wall/Loft Insulation - involving the addition of internal or external insulation to walls, as well as insulation applied to the loft
- Lighting - entailing the fitting of low-energy lighting to all outlets.
We compared the increase in house price value with the improvement in energy efficiency for properties that had carried out improvements to one of the four sections, and those that had not. Below is a breakdown of the findings.
In our previous article, we demonstrated that the relationship between energy efficiency and perceived condition improvement followed a similar pattern in terms of their impact on property value. Thus, we concluded that making improvements that enhance both energy efficiency and perceived condition would be the most effective way to increase property value. In this section, we will focus on exploring which types of improvements are considered to improve condition and by how much more they can increase the property value compared to other types of improvements.
During our analysis, we examined the differences in the two EPCs to identify any improvements made, which helped us gain a better understanding of what factors drove the increase in value. We categorised these improvements into four areas:
- Windows - including the installation of double glazing or improvements to existing double glazing
- Hot Water/Heating - typically consisting of a boiler upgrade, or in the best-case scenario, the installation of a heat pump and underfloor heating
- Wall/Loft Insulation - involving the addition of internal or external insulation to walls, as well as insulation applied to the loft
- Lighting - entailing the fitting of low-energy lighting to all outlets.
We compared the increase in house price value with the improvement in energy efficiency for properties that had carried out improvements to one of the four sections, and those that had not. Below is a breakdown of the findings.
We observed a consistent increase in property value of approximately 2% across all improvement levels for properties that had upgraded their windows to achieve better energy efficiency. This suggests that improving your windows is a reliable way to add value to your home.
See Chart 02.
We observed a consistent increase in property value of approximately 2% across all improvement levels for properties that had upgraded their windows to achieve better energy efficiency. This suggests that improving your windows is a reliable way to add value to your home.
See Chart 02.
We found that minor improvements to a heating and hot water system did not result in any significant increase in house prices beyond what is usually expected for improvements in energy efficiency. However, when a significant upgrade was made to the hot water and heating systems, the value of properties showed a marked increase at the same level of energy efficiency improvement, compared to those without such upgrades.
See Chart 03.
We found that minor improvements to a heating and hot water system did not result in any significant increase in house prices beyond what is usually expected for improvements in energy efficiency. However, when a significant upgrade was made to the hot water and heating systems, the value of properties showed a marked increase at the same level of energy efficiency improvement, compared to those without such upgrades.
See Chart 03.
When we examined the above relationship, we discovered that separating the data between properties sold for less than £250,000 and those sold for more showed that the vast majority of the relationship was driven by cheaper properties. This indicates that installing a new boiler and upgrading radiators has a significant impact on budget-conscious homebuyers who may view the possibility of an old boiler breaking down as a major deterrent to purchasing a property.
See Charts 04 and 05.
When we examined the above relationship, we discovered that separating the data between properties sold for less than £250,000 and those sold for more showed that the vast majority of the relationship was driven by cheaper properties. This indicates that installing a new boiler and upgrading radiators has a significant impact on budget-conscious homebuyers who may view the possibility of an old boiler breaking down as a major deterrent to purchasing a property.
See Charts 04 and 05.
As one would expect, given the generally low cost of upgrading lighting, we found only a very small relationship between properties showing an increase in value at the same level of energy efficiency improvement compared to those without such upgrades.
See Chart 06.
As one would expect, given the generally low cost of upgrading lighting, we found only a very small relationship between properties showing an increase in value at the same level of energy efficiency improvement compared to those without such upgrades.
See Chart 06.
If a significant portion of energy efficiency improvements come from improving wall/loft insulation, the resulting price gains may be lower compared to improvements made to other areas such as windows or a hot water system. While these insulation upgrades still add value, they may be perceived as less attractive to home buyers because they are not as visually noticeable.
See Chart 07.
If a significant portion of energy efficiency improvements come from improving wall/loft insulation, the resulting price gains may be lower compared to improvements made to other areas such as windows or a hot water system. While these insulation upgrades still add value, they may be perceived as less attractive to home buyers because they are not as visually noticeable.
See Chart 07.
At Bricks&Logic, we have thoroughly investigated how improving a property's energy efficiency can increase its overall value.
Our research has involved analysing various factors, including the type and value of the property, how these factors interact with the types of energy efficiency improvements made, and the perceived condition of the property resulting from these improvements.
We have incorporated this research into a single model that allows users to input an address and receive information on the property's current and potential energy performance, as well as recommended improvements and their expected impact on the property's value.
In cases where public data is not available, our engine can search nearby properties for relevant data to provide an accurate estimate. See the examples below for different types of property.
Tables 01 and 02 show the value increase for a 2 bed flat and a 4 bed Period house.
At Bricks&Logic, we have thoroughly investigated how improving a property's energy efficiency can increase its overall value.
Our research has involved analysing various factors, including the type and value of the property, how these factors interact with the types of energy efficiency improvements made, and the perceived condition of the property resulting from these improvements.
We have incorporated this research into a single model that allows users to input an address and receive information on the property's current and potential energy performance, as well as recommended improvements and their expected impact on the property's value.
In cases where public data is not available, our engine can search nearby properties for relevant data to provide an accurate estimate. See the examples below for different types of property.
Tables 01 and 02 show the value increase for a 2 bed flat and a 4 bed Period house.
All of this data is available to our customers in various ways including a dedicated API. If you would like to find out more about how you could integrate this product to help your clients, please get in touch or book a demo via our professional page.
All of this data is available to our customers in various ways including a dedicated API. If you would like to find out more about how you could integrate this product to help your clients, please get in touch or book a demo via our professional page.
