Soaring Energy Costs Pushes Buyers Towards More Efficient New-Build Homes
Escalating energy fees and pressure for climate action are already forcing broad shifts in the real estate industry. With applications for unbuilt properties 50 per cent higher in the first three months of 2022, comparable against the five-year average according to data from Knight Frank.
Research from the Home Builders Federation (HBF) likewise implies buyers are becoming more aware of energy costs and consumption and in a recent survey, indicated that 3 in 4 people are worried about their home’s energy performance. 1 in 4 respondents additionally cited energy effectiveness will be a crucial factor in their next move.
Here at Mulgrave Properties, we have identified an unprecedented increase in interest for lower carbon, energy efficient homes. Most notably since the Chancellor’s Spring statement in March. Advocating a rapid attention switch to the savings sustainable real estate can deliver – from homeowners, developers and financiers alike.
In 2021, 5 new creditors entered the green mortgage market and there are now 14 green mortgage lenders across the UK, together offering dozens of loan deductions and cash-back incentives if purchasing a newly developed property. Compared with just 3 available prior to the pandemic.
New builds are already blazing the eco-investments trail, with more than 4 in 5 homes constructed now in the top two Energy Performance Certificate (EPC) bands based on reports from JLL. Weighed against less than 1 in 20 existing properties.
As the threat of COVID subsides, intensifying interest has created a considerable price cut for energy efficient homes. With major banks turning their attention to green credentials as a means to reduce mortgage rates. Presenting a “cost-effective opportunity for buying brand-new properties.”
By providing best in class efficiency, we can tap into demand from buyers who not only want to do best for the environment, but also save a substantial amount of money as tighter regulations loom – eventually causing older homes to be a lot more expensive to maintain.
Intrinsically, green mortgages are a huge step in making it more financially viable to purchase a new- build property and by doing so, contributing to worldwide net zero carbon ambitions.
In fact, buyers who purchased newly built homes in 2021 saved an average of 52 per cent on their annual energy costs, according to analysis from Zoopla and the Government too are producing policy moves to pull the property industry in line, introducing a ban on fossil fuel heating systems in new-build properties by 2025.
Taking into consideration that real estate is a major contributor of carbon emissions, due in part to air conditioning systems running on electrical grids and heating provided by natural gas boilers, the major of UK homes will be required have an EPC rating of C or higher by 2035 and owners soon risk spending tens of thousands on improvements, such as installing double glazing and comprehensive insulation.
However, statistics from the HBF show new-build houses are much more energy efficient and in 2021, 84 per cent held an EPC rating of B or higher. While among older, second-hand properties, the share was just 3 per cent, which could cost buyers thousands in gas bills and mortgage repayments.
Moreover, households have been hit with a 54 per cent rise in charges following the energy price cap earlier this month. With rates projected to spike further in October as the war in Ukraine intensifies strains on global fuel prices.
Similarly, an early surge in exigence for energy efficient, new-build homes offers only a “taste of what is to come”. With realities of the soaring cost of living apparent and applications for green mortgages anticipated to skyrocket over the coming years as buyers switch on to sizeable savings.
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