Homes with heat pumps come at a premium – how can sellers prepare?

May 09, 2022

Our impact on the environment has become a major stress point in the property sector recently, with a drive to improve green credentials and lower carbon emissions in the home.

This has been underpinned by the government’s initiatives to phase out the installation of new and replacement gas boilers by 2035, as well as changing the energy efficiency of existing and new homes to meet net-zero targets.

Despite the pressure on homeowners to adhere to these impending changes, there is certainly a need to consider greener alternatives, as homes with heat pumps are demanding a 59% premium, according to Savills.

Here at Farrell Heyworth, we analyse the findings and explore how sellers can boost their home’s energy performance certificate (EPC) rating when they come to sell.

Homes with a cleaner energy source command a higher price tag

The survey by global property consultancy Savills revealed that 71% of homebuyers consider EPC ratings to be important in their decision making, with 32% placing more importance on this than they did a year ago.

This comes as households across the UK have seen a significant jump in household bills and the global cost of living crisis ensues.

With buyers more green-conscious than before, 59% said that they would be willing to pay more for a home if at least 75% of a property’s energy was powered by renewable sources.

Analysis of average values of homes sold between 2019 and 2021 shows that newer, cleaner, methods of energy do demand a higher price tag.

Properties utilising community heating schemes demand the highest average prices at £550,673, followed by homes supplied by heat pumps (£483,935) and homes that use oil (£419,490).

Across England and Wales, homes with heat pumps fitted demand the highest premium compared with the regional average – with buyers paying on average 59% more for cleaner energy.

How does the North West differ in heat source values?

The study shows 84% of homes in urban areas rely on main gas supply, compared with just a third (34%) in rural areas, where almost half of homes are fuelled by oil.

Homes in the North West, where Farrell Heyworth is based, are the second most reliant on mains gas (83%), second only to the North East (87%). However, with heat pumps predicted to become the main source of low carbon heating for new homes, this percentage is likely to decrease in the next few years.

Andrew Perratt, head of country residential at Savills, said: “Rural communities, in particular, are heavily dependent upon oil for heating and domestic hot water, but as energy prices increase, and more people work from home during the winter, we are increasingly seeing buyers on the ground add energy efficiency to their search criteria.”

He added: “Rural buyers are increasingly on the lookout for homes with enough land to accommodate installing heat pumps on the property as they seek to replace older boilers in favour of greener, cleaner alternatives. We can expect to see this trend increase as the government provides further funds and support for heat pump installation.”

How can sellers improve their EPC rating?

For sellers, improving your home’s energy efficiency could not only increase its value, but also reduce your carbon footprint, make your home warmer, and reduce energy bills – a huge bonus for buyers during such challenging times.

Fortunately, there are both costly and inexpensive steps you could take, all of which will help you to reap long-term benefits.

As the study demonstrates, replacing your boiler is perhaps the most effective method to attracting today’s eco-friendly buyers. Low-carbon alternatives, such as ground source or air source heat pumps, produce around 3-4 kWh heat energy for every 1 kWh of electrical energy input – boosting your green credentials significantly.

Alternatively, upgrading your windows to double-glazing could improve your home’s energy performance and help to reduce noise.

Loft insulation is also a favoured method. At 270mm thick, it’s easy to install, doesn’t cost much, and can make a huge difference to your bills. Similarly, wall insulation can improve your EPC rating and might help to bring costs down.

Lastly, switching incandescent bulbs with halogen bulbs, compact florescent lamps or LED bulbs is a quick and effective way to bolster your EPC rating. While the initial cost is higher, you can save money as these bulb types use much less energy.

Ultimately, as property and energy prices continue to rise, the value of boosting the energy efficiency of your property is also likely to increase.

To this end, it’s wise for sellers to invest in home improvements that will help to improve your EPC, enhance the value of your property and reduce energy bills ahead of time.

Here at Farrell Heyworth, we operate in the busy North West towns and villages of Southport, Lancaster, Morecambe, Preston, Bolton, Ormskirk and Chorley. To find out how we can assist you on your property journey, please get in touch with us today.

We encourage all our customers to register with our My FH portal, which will give you access to the most up-to-date information; remotely and at your convenience.

You can also find out how much your property could be worth by requesting a free and instant online valuation today.

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