Why energy efficiency should be important to brokers

Global and national drivers

Climate change poses a substantial economic threat. A report by the London School of Economics (LSE) predicts that the cost of climate change to the UK economy will rise from 1.1% of GDP to 3.3% by 2050, and 7.4% by the end of the century. This translates to an increase of £157 billion per year. Additionally, the UK’s energy supply is vulnerable, importing £117 billion worth of energy in 2022. Even in normal years, nearly £50 billion of energy is imported.

Furthermore, energy efficiency has direct health implications. According to the Building Research Establishment (BRE), cold homes alone cost the NHS £540 million per year. Overheating in summer and poor indoor air quality are also growing concerns that need addressing.

Benefits for homeowners

The most immediate benefit of making homes more energy-efficient is the reduction in energy costs. For instance, installing a small solar PV system and battery can generate benefits of nearly £16,000 over their lifetime, at an initial cost of around £7,500 to £8,000. Energy efficiency also enhances thermal comfort, ensuring homes are warm in winter and cool in summer, impacts indoor air quality and increases financial stability by reducing exposure to future energy price increases.

Energy-efficient properties can also benefit from nearly £3,000 in mortgage lender incentives depending on the lender. Lenders are increasingly offering enhanced affordability and more flexible lending criteria for energy-efficient homes. According to the Royal Institution of Chartered Surveyors (RICS), there is a potential green premium of up to 15%, and in the future, inefficient homes might face a “brown discount.”

A real-life example illustrates this trend: two identical homes were put on the market in 2023. The property with solar panels sold for a premium of £15,000, or 2.4% more than the property without solar panels. This indicates that the market is starting to value energy-efficient improvements, though factors such as the seller’s circumstances, the agent’s skill, and market conditions at the time also play a role.

Landlords can benefit from tax incentives and compliance with minimum energy efficiency standards. While some tax incentives might be limited or long-term, they are still available and can provide financial relief for landlords investing in energy efficiency.

Opportunities for brokers

The demand for energy-efficient home improvements is rising, with solar installations increasing by nearly 700% over the past few years and heat pump deployments on the rise. By considering customers’ long-term needs and helping them secure the best deals, brokers can differentiate themselves and increase customer retention.

There is also a substantial financial and growth opportunity for brokers. Improvement suppliers often include direct marketing costs in their prices, which can be passed on to brokers who facilitate these transactions. On average, a broker could earn over £700 per property by engaging in green home improvements.

Propflo’s tools and platforms are designed to support brokers in this endeavour, making it easier to navigate and capitalise on the growing demand for energy-efficient homes.

If you are interested and would like to know more, please reach out via contact@propflo.co.uk to get a quote.