The ‘green premium’ – buyers paying 15% more for energy efficient homes

Homebuyers are spending an average of 15.5% more for an energy efficient property, estate agents claim.

New research by Santander found identified growing interest among buyers for energy efficient properties, with 85% of estate agents reporting increased demand over the past 12 months.

The research among 2,000 homeowners and 175 estate agents claims the property professionals are poised to play an important part in increasing awareness and understanding among buyers of home energy efficiency as demand increases.  

Estate agents put it down to the rising costs of energy bills (54%), alongside increased number of green mortgage products from lenders (45%) and a greater awareness of the need to live more sustainably to combat climate change (51%).

Agents reported that this is creating a ‘green premium’ in the market, with buyers spending on average 15.5% more for a property with a high energy performance certificate (EPC) rating.   

The research shows that estate agents are being proactive in helping bridge this gap, with two thirds in the past twelve months undertaking training to improve their knowledge and a further 29% planning to do so in the future. 

In addition, three in five (61%) have updated their marketing materials in the past twelve months to make energy efficiency information more prominent.

Not only are estate agents seeing a rising demand for energy efficient homes, but they are also noting a decrease in demand for homes with poor EPC ratings, according to the research.
In the past 12 months, 70% of estate agents reported seeing homeowners struggle to sell a property due to poor energy efficiency.

Additionally, the time it takes to sell is on average three months more compared to a property with a good EPC rating. 

This trend is likely to become more common as four in five estate agents predict in the future there will be a rise in sellers struggling to sell due to poor energy efficiency.  

Graham Sellar, head of business development, mortgages at Santander, said: “The feedback from estate agents is striking and reveals that in an environment of rising cost of living pressures, there has been a real shift in preference among buyers for homes with reduced energy costs.

“Estate agents will be a key part of raising understanding and awareness among buyers and sellers on the benefits of having an energy efficient home, so it is encouraging so many are being proactive in improving their understanding. With the findings showing a clear ‘green home premium’, the benefits are clear, and any changes made will not only reduce buyers’ bills but make the property more attractive to buyers in the future.”