Finance

Energy emergency

EXPERT COMMENT

Energy prices are set to soar, so it’s more important than ever to make wise choices about the home you buy, the suppliers and tariffs you choose and the way you live. Kay Hill offers some advice

There is no getting away from the fact that gas and electricity are becoming

more and more expensive. The energy price cap – the amount companies are allowed to charge per kWh on a standard variable tariff – will rise by 54% on 1 April, meaning an average increase of £690 a year on bills (more if you’re a heavy user) and a further 47% rise is predicted for October.

LEARN YOUR EPC

Whenever a home is sold or rented out, the owner must obtain an Energy Performance Certificate (EPC) which gives a rating from A down to G according to how energy efficient the property is, and tells you what improvements would need to be made to move to a higher band. It is already illegal to let out a property with an F or G-rating, and the Government has plans to force landlords to upgrade to a C in the next couple of years. There are also plans to make homeowners improve their property to at least a C if they want to sell after 2035.

Yet according to a recent study by Nat West, only 15% of house hunters think it is essential that their new home is a C or above – meaning that a lot of buyers will inadvertently find themselves walking into a new home that will be costly to heat and may require expensive upgrades before they can move longer term. At present, three in five homes for sale have a D rating or worse, according to research from Rightmove, and, even more worryingly, 1.7 million homes across England and Wales are deemed impossible to upgrade to a C.

You might assume that buying a new home means you don’t have to worry about the EPC, but astonishingly there is no minimum EPC rating requirement.

Just a fraction of new homes in the UK are built to an EPC A-rated standard. Creating homes today which aren’t t for the future and will need to be retro tted in a matter of years is simply not right. We will be calling for Government, housebuilders and lenders to work together to tackle any remaining barriers to improving the environmental standards of new homes. Buildings are the second largest source of emissions in the UK. Creating sustainable communities is possible and we are demonstrating this through our Oak eld development in Swindon – delivering one of the greenest communities in the UK with all 239 homes hitting EPC A-rating. We all need to play our part in delivering high-quality homes that are t for the future. We will be sharing all our learnings and plans, helping developers commit to a clear roadmap for more a sustainable future. In addition, with more than 1.5 million homes on our mortgage balance sheet, we are also developing new products to help our members make a real difference to the environment by making improvements to existing properties. Together we can tackle the climate crisis and create greener and more sustainable homes.

Sara Bennison, Sara Bennison, Chief Product Chief Product and Marketing and Marketing Of cer, Of cer, Nationwide Nationwide Building Society Building Society

According to Government figures for last autumn, less than 2% of new homes were rated EPC A, 83% were rated B, 12% rated C and a dismal 5% gaining a D or E (probably conversions of older buildings). What makes it harder for buyers to make an informed decision is that although it is a legal requirement for all homes, including new builds, to have an EPC featured in all advertisements (or a PEA – Predicted Energy Assessment for homes being bought off-plan), a quick glance at housebuilders’ websites and new homes on Rightmove shows an almost total disregard for the law.

So the first piece of advice is before you put a deposit on any home, new or old, request an EPC or PEA and look at it very carefully. The rating is important, but so is the improvement advice – for example, one property might only need a better hot water tank jacket, loft insulation or energy efficient bulbs to push it from a D to a C, whereas another might need £15,000 of disruptive wall or floor insulation to achieve the same result. You can also check EPCs on the Government’s online register which you’ll find at gov.uk/find-energy-certificate.

You will pay a little more for a higherrated home – research by Nationwide last year found that A or B-rated homes cost around 1.7% more than a similar D-rated home – but even at last year’s energy prices, each step up the EPC alphabet ladder saves around £250 year, and many buyers in A-rated homes say they have very little need for heating at all! In addition, there are a number of mortgage providers who provide better mortgage deals for A and B-rated homes.

TIME TO SWITCH?

Shopping around for the best fixed gas and electricity deal used to be an annual pastime that could save hundreds of pounds every year over remaining on a standard variable tariff with a big six company. Sadly, the financial collapse of more than 20 smaller energy companies has meant that few are even offering fixed tariffs, and if they do, they are outrageously expensive – in fact, there are so few choices that many comparison sites have stopped their service temporarily. In general, paying monthly by direct debit and taking both gas and electricity from the same supplier is the cheapest option.

There are also worrying cases of energy companies trying to force new customers on to expensive fixed rate tariffs by not offering them the standard variable rate –energy regulator Ofgem has confirmed that while suppliers don’t have to advertise the standard rate, they must put customers on it if they ask.

Most experts recommend that if you have to move suppliers at the moment that you insist on the standard variable tariff as this is protected by the price cap, plus it has no early exit fees, so if energy prices fall you can then move to a more economical fixed tariff.

WATCH THE WATTS

Whether you are about to move in to your new home or struggling to save your deposit, the less you can spend on the bills the better, so think about the following:

Turn the thermostat down – dropping your room temperature by just 1°C can lower your heating bill by 10% (and who doesn’t love a fluffy winter jumper!).

Even if you are in rented accommodation there are small steps you can take yourself to make it more energy efficient – you could stop up draughts with a homemade fabric “sausage” draught excluder, buy a removable jacket for the hot water tank, put a fluffy rug over floorboards and change regular lightbulbs for energy efficient ones.

Use your appliances effectively – only run dishwashers and washing machines when full, and choose short, lowtemperature programmes; don’t leave appliances on standby, turn them off at the mains – this alone could save £40 a year; check the temperature of your fridge and freezer and defrost if necessary; choose short showers rather than long baths and only fill the kettle with the water you need. If you are buying new appliances, check their efficiency rating.

If your employer has required you to work from home, even for a single day, you can claim £125 from the Government towards additional energy costs. Take a look at gov.uk/tax-relief-for-employees.

EXPERT COMMENT

EPCs have had a bit of a rough ride, with many viewing them as an administrative hassle. However, they have done much to make us more aware of energy performance issues. Now, with the UK legally obliged to cut emissions by 78% by 2035, EPCs can play a key role in helping us to re-evaluate energy use in our buildings. And with the right approach to technology, they can become dynamic tools that help us progress more swiftly towards net zero. Planned policy introductions such as banning homes to be rented if below EPC rating Band C, means that as we approach 2035, EPC ratings will become a bigger variable when evaluating house prices. As we approach the net zero deadline, we expect to see higher valuations for more energy-ef cient homes. That’s why at houzen we have worked on supporting homeowners in getting ready for the upcoming changes. We have now released our online tool which adds a more action-based approach to EPCs and analyses a property and its potential in seconds. It scans pictures using Computer Vision and plans a sustainable refurbishment, together with costs and timeline.

Saurabh Saxena, Founder, houzen