The value of Energy Performance Certificates now that HIPs have gone
Elmhurst Energy Systems, leading energy assessor accreditation body for EPC production in the UK, asks the question ‘are attitudes towards energy efficiency changing and what does the future hold for EPCs now that HIPs are gone?’
Energy Performance Certificates
Energy Performance Certificates (EPCs) are mandatory throughout Europe, in the UK they have been progressively introduced since 2007 with over 4.5 million produced so far. EU legislation dictates that EPCs must be provided to prospective buyers or tenants every time a building is constructed, sold or let-out and once produced, certificates can be reused for up to 10 years.
However, with the end of Home Information Packs (HIPs) the EPC is arguably going to be more prominent now that it is not buried away inside the HIP and hence, potentially viewed differently by consumers. Will consumers start to value an energy label on a home in a similar way to when purchasing a car or household appliances?
Elmhurst believes that in a world of increasing energy prices and environmental awareness, consumers will increasingly consult their EPCs to make wiser purchasing decisions to save money, energy and carbon emissions. This view is echoed in a recent survey carried out by YouGov plc1, suggesting that potential buyers are placing more emphasis on energy efficiency and environmental standards when looking to move home. The survey ranked energy issues as 3rd most important out of 22 common property selection criteria, compare this to an older survey2 carried out before EPCs were introduced, which indicated energy efficiency as 10th out of 11 selection criteria - attitudes do appear to have changed.
The end of HIPs has also profoundly changed the market for EPCs which, for the point of sale were typically instructed by HIP pack providers, often as part of a national supply chain through intermediary panels. Whereas now it is the estate agent that is key to ensuring the EPC is instructed and now more likely to be provided by a local independent energy assessor working directly for the agent. This new agent lead EPC market creates a number of opportunities and potential challenges for agents, energy assessors and the consumer.
Firstly, agents must ensure they are familiar and compliant with the new rules regarding EPCs otherwise they and their clients could face fixed penalty fines.
More prominent EPCs will lead to more consumers actually seeing an EPC, they will also be able to scrutinise the information contained within it and potentially complain if they don’t like what they see. While more consumers scrutinising the EPC is essential for the success of the EPC policy, the potential for complaints and the ability to manage the perception of clients is now an essential tool that agents must ensure they are providing. A good quality EPC by instructing good quality and reliable energy assessors will help avoid such complaints.
The perceived value of the EPC is also likely to improve now that HIPs have gone, in that previously, the vendor paid typically a few hundred pounds for a 50 plus page HIP which they did not understand, but only ever saw the energy assessor during the 20 to 40 minute EPC survey. However, now vendors only pay typically £50 to £100 for the EPC, get the same survey and a much more clearly defined report that they are likely to understand – a process and fee level that is going to much more acceptable to most consumers.
Interestingly, both the shift to a more localised EPC market and the improved perception of EPC value bode well for the future of the EPC, agents and energy assessors. Without the HIP providers, and as many intermediary panels taking their cut, more of the fee should be left over so that the energy assessor can get a decent fee for a quality inspection and allow agents to still make a commission, even at the lower overall fee levels.
Now That HIPS Are Gone – Quality EPCs matter
Estate Agents must ensure they are familiar and compliant with the new rules now that HIPs are no longer required, EPCs are still mandatory and can only be carried out by accredited energy assessors. In order to ensure that people selling their homes continue to make EPCs available to prospective buyers, the Government have also introduced new Regulations which create a number of new legal requirements on both Sellers and Estate Agents including:
- Sellers must ensure that an EPC has been 'commissioned' before marketing of the property commences
- An EPC is considered 'commissioned' when an energy assessor has been instructed to prepare the EPC and the EPC has either been paid for or has given a clear undertaking to pay for it
- Estate agent must be satisfied that an EPC has been commissioned before commencing any marketing of the property
- In all cases the EPC must be provided within 28 days of initial marketing of the property
- All of the above ‘new’ duties carry fixed penalty fines for both estate agents and vendors
At Elmhurst we have been providing energy rating products and services for over 17 years and understand the importance of quality and technical expertise for the success of EPCs, but also the importance of successful customer relationships for estate agents. Hence, at Elmhurst, we ensure everything we do is focused on guaranteeing our 4000 plus energy assessors working across the UK are amongst the best in the business. Recently voted as ‘Best Energy Assessor Accreditation Body’ for the second year running at the Property Professionals Show 2010, emphasises our commitment to the industry and our continued efforts to ensure high quality energy assessors.
We operate a good quality accreditation scheme and ensure that all Elmhurst accredited assessors are backed by the following:
- Comprehensive technical support to all accredited assessors ensuring a consistent high quality EPC
- A strict quality assurance procedure and Code of Conduct for all assessors
- Access to 3rd party complaints handling and dispute resolution
- Continuing Professional Development to ensure all assessors are fully up to date
- With over 17 years experience, we continue to drive the industry forward with technical expertise unrivalled by any other accreditation body.
We also want to ensure that all estate agents get the opportunity to benefit from using highly skilled Elmhurst accredited energy assessors. The ‘Search for an Elmhurst Assessor’ facility is an online function created by Elmhurst for estate agents and members of the public to search solely for an assessor accredited with Elmhurst. Using this facility ensures you guarantee a well trained and audited energy assessor to complete your EPC to a high standard.
Compliance & the recast of the EU Directive
Compliance with the EPC requirements is currently uncertain. Prior to the suspension of HIPs, compliance with the Energy Performance in Buildings Directive (EPBD) Regulations in the marketed dwellings sector was very high. Since the suspension, EPC lodgements have declined whilst estate agents have reported increased listings, suggesting a decline in compliance may have occurred.
The available anecdotal evidence is that the EPC is not always being provided to prospective purchasers and tenants in a timely manner and in a form that encourages them not to take note of the content. This can best be addressed by ensuring that the key information (the rating and recommendations) are incorporated into those marketing materials that are routinely seen by prospective buyers and tenants.
Responsibility for enforcement currently lies with Trading Standards and must therefore compete for resource and attention with numerous other priorities. Although to date, not a single penalty charge notice for non-compliance has been issued since the EPBD Regulations were introduced.
However, the recast of the EU EPBD is now finalised and will shortly introduce new requirements for information from the EPC to be included in all advertising for buildings offered for sale or rental. The introduction of the ‘green deal’ also means the future use and importance of the EPC has been secured so non-compliance will not be allowed to take hold.
Given that every EPC is held on a central Government register, enforcement should be extremely simple and while Government will surely grant some grace period for agents to comply with the new rules it is now only a matter of time before the first agent is prosecuted.
Future of EPCs & the Green Deal
The Government has committed to being the “greenest Government ever”. A key challenge is delivering a significant reduction in energy waste and carbon emissions from our existing homes. By necessity, this can only be done through a substantial and sustained increase in homeowner investment in energy efficiency measures.
The EPC is viewed as a key tool to support this goal by providing detailed and reliable information to homeowners and prospective buyers, as well as, being able to measure the uptake of improvements on a national basis, but the other barriers must also be addressed to ensure the provision of the right financial support and incentives, as well as, mature supply chain of approved contractors to undertake the improvement works on the scale necessary.
With this in mind the new Government proposes to introduce a Green Deal “Pay As You Save” scheme, under which a homeowner can finance energy efficiency improvement measures through a loan attached to their property and whereby the loan repayments are less than the anticipated energy savings, reducing the homeowner’s net cost.
Such a scheme is still in the early stages of development but could see the introduction of ‘Green Deal’ mortgages where lenders would be encouraged to offer mortgage extensions to homebuyers and existing borrowers for investment in approved energy efficiency measures and funds would only released when an updated EPC is produced demonstrating that the measures have been installed and likely to be based on the cost effective measures recommended in an EPC.
References
1 YouGov plc 2009 HIPS FIELDWORK DATES: 22nd - 26th May 2009 On Behalf of the New Homes Marketing Board
2 University of Reading, College of Estate Management, Mike Waters, Jan 2007
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