Renovation boosts property prices. Here's why.

Oped for eceee column, 28 February 2017

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By Adrian Joyce, Renovate Europe Campaign Director

Renovations are not just a precondition for the EU to meet its climate goals; they are an investment that is literally, as safe as houses, if recent studies are to be believed.

Every time a house moves up a notch in energy performance, its price gets around the same boost that it would from an extra 10-15 m² in size.  That is partly down to the huge savings that can be recouped from energy bills.  A renovated house that moves from an ‘E to a ‘B’ grade in its energy performance certificate (EPC) will save an estimated €24,000 over 30 years, according to an analysis of 365,000 house sales in Denmark last year.

But it may also reflect the great reduction in health problems that experts believe comes from increased energy performance and improved indoor air quality.  Reductions in respiratory and cardiovascular illnesses, rheumatism, arthritis and allergies, as well as fewer injuries have been key to taking the benefit-cost ratio from deep energy renovations to 4:1.

Like good health, it seems that financial wellbeing also begins at home.  Each one-step energy improvement from G-A is worth between €5,400-7,400 to an average 100 m² property, according to a Copenhagen Economics study for the Danish Energy Agency.

Multiple studies have confirmed such findings, with fringe benefits including significantly reduced risks of mortgage default for owners of energy efficient homes.  A European Commission assessment in 2013 found that in Vienna, a one-grade EPC improvement corresponded with an 8% hike in the sales price.  In Flanders, the equivalent of a one-letter upgrade was found to trigger a 4.4% rise in property value, while for Marseille and Lille in France, the figure was 4.3%.  The positive correlation between the EPC letter and value was repeated in Ireland and Italy too.

In fact, only one region bucked the trend, Oxford in the UK.  There, EPC information seemed “poorly integrated into the decision making processes of prospective buyers and sellers,” the report said.  Its authors suggested that the sample groups may have been too small, or variables wrongly omitted from the number-crunching. Perhaps so.

But it may also be worth noting that the UK government at this time began considering the abolition of display energy certificates from public buildings. En masse, these were not being acquired, exhibited or inspected, even though the EPBD requires their display “in a prominent position”.  Energy information is vital for buyers and sellers alike, but 81% of the 108 Oxford estate agents surveyed did not have EPC’s for specific properties, suggesting that they were only provided late in the home-buying process.

But a peer-reviewed Danish Building Research Institute study last year found that mandatory high-profile displays of energy grade ratings had a “decisive” effect on house prices.  “The lack of knowledge and awareness of an energy performance rating can generate considerable bias in both the adoption of energy labels and the inclination for sales of highly energy-efficient properties,” it said. “In other words, without branding of the current energy performance of buildings, there will be no market penetration.”

In Denmark, EPC’s had only a modest effect on house prices for 15 years, until European Commission requirements for energy ratings to be displayed prominently in advertisements were implemented, at which point the value of energy efficient properties soared.

This point has to be underlined:

It is not enough that buildings perform better in their energy usage, they have to be seen to be performing better. And the Commission should be less shy about ensuring that they do.

END

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