Calls to overhaul the Energy Performance Certificate system in UK underpinning the ratings amid mounting evidence that they are inaccurate

Energy performance certificates (EPCs) were introduced in 2007. Yet in a report last month the Climate Change Committee gave warning that the certificates had “extensive issues” and that there was an urgent need to make them fit for purpose. Emily Gosden discusses the problem in an article on The Times website.

 

Energy certificate ‘flaws’ leave homes on shaky ground

When it comes to buying a home, its location, square footage and outside space tend to top priority lists. Energy performance ratings? For most house-hunters they’re an afterthought.

But as Britain steps up action on climate change, the certificates that rate properties’ efficiency are set to become increasingly important and could even determine how easy it is to get a mortgage. That, in turn, is driving calls to overhaul the system underpinning the ratings amid mounting evidence that they are inaccurate.

Energy performance certificates (EPCs) were introduced in 2007 and rate properties from A to G based on estimates of the costs of heating, lighting and hot water. They give a prospective buyer or tenant an indication of their future energy bills, and of potential costs and savings from investing in measures such as insulation or double glazing. At present about 16 million homes in England, or two thirds of the total, are rated D or worse.

Upgrading this draughty old housing stock will be critical to reducing carbon emissions from home heating in order for Britain to meet its net zero target.

The government is aiming for as many homes as possible to be grade C by 2035 — which requires policies and incentives to encourage homeowners to invest tens of billions of pounds in upgrades. Already landlords are required to ensure that properties are at least Band E and the government is planning to tighten this further to Band C by 2028.

Yet in a report last month the Climate Change Committee gave warning that the certificates had “extensive issues” and that there was an urgent need to make them fit for purpose.

A government consultation showed that only 3 per cent of respondents rated the certificates’ reliability as “good”. It acknowledged that they needed to be made “accurate, reliable and trusted”, especially as they would “increasingly have a financial value”.

One of the ways in which the government is looking at driving energy efficiency upgrades is by giving mortgage lenders targets for lending to greener homes. That could see lenders prioritise loans to the most efficient properties, pushing up borrowing costs for those with lower energy ratings. Already some lenders such as Natwest, Barclays and Nationwide offer preferential rates for mortgages on properties with the very best energy ratings.

Upgrading old housing stock will be critical to reducing carbon emissions from home heating in order for Britain to meet its net zero target

Upgrading old housing stock will be critical to reducing carbon emissions from home heating in order for Britain to meet its net zero target

Joe Garner, chief executive of Nationwide, told the Green Horizon Summit last year that it had found EPCs to be “rather crude” and that they even “vary a bit depending on the day of the week and month of the year that they were issued”. That’s not the only problem. “We’ve got one property that claims to be 8,500 years old, which I suspect is a data entry error,” he said.

In an EPC action plan, the government has acknowledged myriad areas that need improvement, from spotting data input errors to improving “assessor competence”. One of the biggest flaws highlighted by experts is more fundamental: the fact that EPC ratings are based on modelled performance, derived through a “tick-box” exercise that scores properties on whether they have measures such as loft insulation.

Knauf, the insulation group, says that its evidence shows that this can be far removed from actual efficiency performance. The company has developed a system to measure what it says is the true performance of properties, using sensors together with weather data and energy meter readings to assess the real-world energy efficiency of a home over a 12-week period.

On a 1970s housing estate in Trafford, 12 homes that had certified ratings of D or E were assessed using Knauf’s sensors before and after refurbishment. The properties had a 31 per cent average improvement in energy efficiency but in most cases this made no difference to their EPC ratings. Instead it simply “brought their real-world performance more in line with their notional performance claimed in the EPCs”, Knauf said. In two of the properties, changes that the EPC system estimated would reduce heating demand by 14 per cent actually cut it by 43 per cent. Knauf says that such discrepancies arise because the EPC assessment takes no account of the quality of installations, such as whether insulation has been fitted properly or if it has degraded over time.

Steven Heath, technical director of Knauf Insulation, said: “We can only achieve the UK’s promised zero carbon future if we drastically reduce energy use in buildings. The current system underpinning EPCs will ultimately need to be replaced with real performance measurement. That will give homeowners, landlords, mortgage lenders and the government the confidence they need that low-carbon buildings are performing as designed and are genuinely low-cost to run.”

Mike Thornton, chief executive of Energy Saving Trust, agreed that there was a need to “ensure EPCs are produced to a consistently high standard” and to make improvements to the system. However, he cautioned against dismissing the certificates and said that they still served to identify simple measures that were often lacking from many properties.

“Energy performance certificates are understood by the public and there is good coverage across the UK,” he said. “Whilst they are not perfect, the reality of the climate emergency is that we need urgent action to upgrade our building stock and EPCs are a useful tool to drive this.”

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