New homes are already reaching higher efficiency standards, with 84% of completed developments in England & Wales in 2023 providing properties with EPC ratings of A or B. However, when assessing existing housing stock, just 4% nationally is at EPC A or B, and fewer than half at EPC C. Housing accounting for a fifth of the UK’s carbon emissions.
The need for retrofitting works is significant. Close to a half (48%) of all existing properties surveyed in 2023 have a rating of EPC D or below. Applying a typical industry average cost of retrofitting an existing home to grade C or above, estimated to be £35,000 per property, and comparing it to average house prices shows the cost of retrofitting would exceed 10 per cent of property value in more than half (56%) of local authorities.
A £35,000 bill would account for more than a fifth of the average house price in 26 local authorities. Of the top ten most impacted, eight are in the North East and the North West. In Burnley, for example, the average house price across all home types is £130,209 and average retrofitting costs would account for 27% of a property’s value. This grows to 50% for flats. This is in stark contrast to boroughs like Hackney, where the percentage drops to 6%.
This gulf in values and costs impacts private homeowners, housing associations, private landlords, and local authorities alike. Upgrading an existing home is a significant undertaking for individuals, while working at scale can see costs rise to an eye-watering level.
For housing associations and local authorities, who own more than 4.5 million social homes, upgrades represent a major transformation project. And by putting a greater burden on housing providers, fewer new homes will be delivered as funds and the construction workforce is earmarked for retrofit rather than new housing development.
In a worst-case scenario, homes will potentially be left empty to be demolished rather than upgraded, because of the significant cost versus the value of the property. It is hard to evidence a resulting uplift in value in low value markets.
There is a clear role for government to properly incentivise the private market and support the social housing sector to help decarbonise homes across the country. This, in turn will support a healthier population living in warmer, more energy efficiency and cheaper to run homes, a reduction in the market’s carbon footprint, and take us a step closer to net zero by 2050.
Click here to read our latest JLL Decarbonising UK housing report.
