Why making your home more eco-friendly could inadvertently lose you thousands of pounds

A house of money in a hole with central heating pipes illustration
A house of money in a hole with central heating pipes illustration

Homeowners spending thousands of pounds to upgrade their properties in an eco-friendly manner could see their energy ratings fall because of the “flawed” way the scheme operates, industry experts have warned.

The Energy Performance Certificate (EPC) grades a property from A to G based on its eco credentials and costs between £35 and £120.

However, defects in how homes are assessed can leave owners out of pocket and damage house prices.

The grading is currently based on utility bills and not carbon output, which can penalise savvy homeowners and landlords who have made expensive eco-upgrades to their properties.

The emphasis on cost means EPC grading has a bias towards gas because it is cheaper than electricity, despite the latter’s green credentials.

Industry insiders have also criticised the “non-intrusive” inspection carried out by assessors when grading a property, which often includes guessing the type of wall or loft insulation.

John Harvey, an energy assessor who spoke using a pseudonym, estimated that one in four EPC ratings were incorrectly graded because of the subjective nature of the inspection.

He warned owners of older brick properties in towns and cities were particularly hamstrung by the rules.

Mr Harvey said: “Take a Victorian semi-detached four-bedroom house with a modern mains gas heating and hot water system and good loft insulation, but no wall insulation. A typical EPC rating would be D.

“Installing a modern air source heat pump would require significant disruption and expenditure – but its EPC rating would drop to an E, primarily due to its lack of insulation.”

Mr Harvey said in one case owners of a similar Victorian property with a D rating had replaced the existing mains gas and central heating system with modern electric panel heaters and immersion hot water heating on a single energy tariff. The EPC dropped to a G.

In September 2020 the government published an EPC “action plan” in which it acknowledged the grading system needed to provide “accurate, reliable, and trusted” certificates.

But assessments are yet to be overhauled.

In January an independent review by Conservative MP Chris Skidmore recommended ratings be reformed to provide a “Net Zero Performance Certificate” as a future benchmark for energy efficient homes.

David Simms, a small-scale developer and landlord in London, was stunned when his EPC dropped by two ratings after he spent £10,000 on energy efficiency improvements.

In 2020 Mr Simms renovated a five-bedroom rental property, including fitting extensive insulation. Smart meter data in the two and a half years since shows the house uses the same energy as a typical two-bedroom modern flat, according to estimates by energy regulator Ofgem.

Yet his EPC was downgraded by two grades at the next inspection. Mr Simms said: “The assessor said we couldn't take the extra insulation into account as he couldn't see it and couldn't take photos of the building work showing it in place.

“I also installed smart heating systems which check occupancy and only heat when people are in.

“The EPC assessor said the smart elements couldn't be taken into account and I was advised to fit 1970s style storage heaters as this would lift the EPC by one band. It’s absolutely crazy in my mind.”

This week The Telegraph revealed the deadline by which all rental properties will be legally required to have a minimum EPC C rating has been extended to 2028.

Ministers had previously proposed a deadline of 2025 for newly-let rentals to achieve an energy performance rating of at least a C, and a deadline of 2028 for all other rented properties.

A £10,000 cap on energy efficiency works per property has been mooted by the Government and landlords face a £30,000 fine if they fail to comply.

Jess Ralston, of the Energy and Climate Intelligence Unit, a non-profit organisation, said: “EPCs are definitely not perfect but they are a good starting point to spur homeowners into taking action on inefficient properties.

“But they are not reflective of carbon emissions. If you move from a gas boiler to a heat pump it could lower your score.”