A recent study by Nationwide has revealed that landlords selling properties with poor Energy Performance Certificate (EPC) ratings are unlikely to face significant price discounts. Despite concerns surrounding the return of the EPC C-rating target for rental properties by 2030—reinforced under the current Labour administration—discounts on homes with lower energy efficiency ratings appear to be modest.

Nationwide’s analysis, which incorporated energy efficiency ratings alongside typical property characteristics, found that homes rated A or B attract a premium of 2.8% compared to those rated D, the most common rating. There is little price difference for homes rated C or E when compared with D-rated properties. However, homes rated F or G, the least energy-efficient, are valued 4.2% lower than similar D-rated properties.

The study highlights that while energy efficiency influences property values, the impact remains relatively modest but has grown since pre-pandemic levels. Properties with high energy efficiency (A/B ratings) are now attracting a larger premium, while F/G-rated properties face a steeper discount. This shift may evolve further, especially if the government introduces more incentives to improve energy efficiency, aligning with its Net Zero goals for 2050.

Robert Gardner, Nationwide’s chief economist, pointed out that although energy efficiency has improved over the past decade, progress has slowed. Currently, 48% of UK housing stock is rated C or above, compared to just 18% in 2012. Newly built homes are much more energy efficient, with 97% rated C or above, though new builds only increase the housing stock by about 1% annually.

Gardner also noted the high costs associated with improving energy efficiency. Government estimates suggest upgrading homes below a C rating would cost an average of £7,400 per property, with the total cost for improving the entire housing stock projected between £91 billion and £94 billion. Properties with lower ratings (E to G) would face steeper improvement costs, averaging £13,500 per dwelling.

Nationwide’s report underscores the need for further incentives to encourage energy efficiency upgrades in order to meet the government’s target of upgrading as many homes as possible to band C by 2035.