Green Values and the UK Residential Market: The Impact of Energy Performance Certificates on Property Value

Mike Waters and Ben Elder

ERES from European Real Estate Society (ERES)

Abstract: In recent years there has been increased speculation amongst the UK surveying profession regarding the link that exists between market value and environmental performance. Practitioners and academics alike have discussed a positive relationship between value and energy efficiency, alongside other green practices. However, there is a lack of strong evidence that quantifies the financial gain that can be achieved from high environmental performance within the residential sector. Recent research undertaken at the College of Estate Management has shown that investment in eco-friendly innovation could be fully justified since house purchasers have demonstrated a willingness to pay more for energy efficient homes, some by as much as £15,000. From June 2007 the energy rating will become an essential part of the house buying process, via the introduction of Energy Performance Certificates (EPCs) with the ideal that the homeowner is presented with enough information to decide on cost-effective solutions when investing in energy efficiency. As an EPC will disclose new environmental information related to the house purchase before a sale is agreed, property values will undoubtedly be questioned. The research aims to examine how information presented in EPCs will impact upon householder attitudes towards environmental performance. The survey results and statistical analyses presented here indicate that EPCs are likely to provide a useful mechanism for improving the environmental performance of UK residential property. Its introduction is likely to raise public awareness to residential energy saving. Evidence also suggests a positive relationship between energy efficient ratings and attainable market values.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2007-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2007_316

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