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Green is the colour – but who pays?

First published by Best Advice

Government proposals leave much to be desired

The government’s recent proposals on how it intends to encourage ‘green’ home improvements amongst the UK’s housing stock, have been met with a fair degree of opprobrium from various stakeholders, and even though it’s absolutely right to focus on improving the energy efficiency of our homes, I can’t disagree with some of the criticisms being levelled.

First up, what is being proposed? Well, government is considering making lenders disclose the energy performance of the homes on which they lend and is likely to set out how it wants properties to have an average EPC rating of C or better by 2030. It also revealed how it will offer grants of £5,000 to help households replace gas boilers with greener heat pumps.

On the surface it all seems fair enough but you don’t have to dig very deep to see why critics are calling this inadequate. It all sounds rather grand but I’m afraid the carrot is too small and the stick is simply not harsh enough.

Proposed grants leave critics heated

Let’s just look at the heat pump grant available. For a start, it’s only available to 90,000 households when there are said to be approximately 22 million gas-heated homes in the UK.

£5k is also a drop in the ocean when it comes to the true cost of replacing a boiler with a heat pump. The grant goes towards paying for the kit but overall, on average, they tend to cost in the region of £10-£15k, and there’s also the cost of installation on top of this. Add to the mix the fact heat pumps tend to heat a home to a lower level than traditional boilers, and there will also be a requirement for the owner to insulate the home to a far better standard in order to get the full benefits.

Overall, the true cost is likely to be in the region of £25k, of which you might be one of the lucky 90,000 to get access to the grant. It still leaves you with a considerable amount to pay, and where might you get that money from especially at a time of rising inflation and an increased cost of living?

You might think it’s still a worthwhile exercise but that initial outlay is still going to be beyond what most people are able and willing to front up. Perhaps the 90,000 number is the government’s view of the actual number who would be able to make this change rather than the number that actually need to? Maybe people will look to borrow the amount in the hope they can recoup a greater value when they sell, but how long might that take?

Clarification is key to galvanising positive action

This is not meant to be a ‘whinge’ because I don’t think there’s any doubt that governments need to act in this area and it’s important we do so now. But there needs to be greater clarity. The talk about EPC ratings and net zero emissions is confusing – does the government want the former or the latter because they can be very different? What level are they trying to get the property to because that will determine what is required?

It’s likely that we’ll have to wait until after COP26 before we get some true clarity but we, as a surveying firm, are certainly looking at what we can offer homeowners to help them make better decisions, not just in terms of a property they are looking to purchase but, if they’re not moving, what they may need to do to their existing property and also, for landlords too, who will soon have to meet stricter requirements in terms of the EPC levels of their properties.

We feel we are ideally placed to give that advice via either a standalone survey or an extension to the Home Buyer Report. This will be an independent view on the energy efficiency of the property and how they might meet the government requirements – whatever they eventually turn out to be.

Is it too little too late?

However, it already feels like the government carrot is going to have to improve considerably in order to make a real difference to the housing stock in this country. Plus, as it currently stands, there are simply too many people involved all who want paying to make it viable for the vast majority of homeowners. Surveyors will be able to cut that cost down via the advice they give – and this is clearly something we will be doing as a firm– however we need a greater degree of clarity and, perhaps, a greater sense of urgency to move this forward.

Green is undoubtedly good but it’s going to need something far less wishy-washy in order to move the market in the direction that is clearly required.

Simon Jackson is managing director at SDL Surveying

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