Given two properties in the same location and of the same size, would you prefer to buy the one that generated an income and/or saved you money on your energy bills? Would you perhaps pay more for the one that cost you less to run?
Those are going to be increasingly important questions in the years ahead.
Income from the Feed in Tariff
If you installed solar panels at your home before the Feed in Tariff (FiT) started to fall, you should be expecting an income of around £1,500 a year from the government plus savings on your energy bill. That is index linked, tax free and guaranteed for 25 years. If you sell your home, that income and those savings can be passed on the new owners.
Since then, the amount to government pays per kW generated has fallen from 43 pence to 21 pence and, from the 1st July, will fall again, probably to somewhere between 13 pence and 15 pence per kW. That makes solar panels look a lot less attractive, although the cost of installing them is also falling rapidly.
New opportunities to come
But there are other energy saving opportunities in the pipeline.
The Renewable Heat Incentive (RHI) should soon be available for domestic applications. The RHI provides financial incentives for using renewable technologies to provide central heating in much the same way as the FiT provides payments for generating electricity, so it too could be a source of income.
It is expected to apply to anyone not connected to the gas grid, so it’s ideal for rural homes. Whatever technology you use, it will have to be accredited by the Microgeneration Certification Scheme
On top of that, the Green Deal will provide loans for installing energy efficiency measures. The key to the scheme is that the cost of the repayments should never be greater than the savings achieved and should never last longer than the lifetime of the equipment installed. Repayments are made via your electricity bill, but should never be greater than the amount you save. You can find out more from the Department for the Environment and Climate Change here
While these schemes are in their infancy, homes with energy generating or saving technology will soon start appearing on the market.
Will they command a premium in the market? Will they prove more attractive to buyers and so easier to sell? If they do, demand for energy saving systems will soar. If they don’t, it will be even more difficult for the government to achieve its aim of cutting carbon dioxide emissions from homes.
Limited impact of EPCs so far
The signs so far are not encouraging. Energy Performance Certificates have been required for every property coming on to the market for more than three years (since December 2008). At the moment, there is no reliable evidence that properties with a ‘good’ EPC sell more quickly or for more than properties that are less energy efficient.
Moreover, the difference in running costs between an energy efficient home and a less efficient one is relatively small compared to the purchase price or the mortgage.
Higher energy costs may tip the balance
But energy prices have risen sharply recently and, if that continues, buyers will start paying a lot more attention to energy efficiency. That may not affect selling prices in the short term, might it could well make tip the balance in favour of one property over another.