Energy efficiency of new builds accelerates

Energy efficient new build homes are on the rise, with the number of new homes awarded the top A grade hitting a record high in the second quarter.

In total, 2,387 made the top grade in Q2, up 36% from 1,758 in Q2 2022, and a 12% improvement on the previous quarter.

The proportion of A-rated new homes out of all new stock also hit a record high of 4.1%, compared with just 2.6% in Q2 2022 and 3.8% in the previous quarter.

Homebuyers are taking more notice of energy efficiency ratings, with over 70% of respondents to our Summer Residential Property Sentiment Survey saying this would be a more important aspect of their next home compared with 18 months ago.

Over a quarter said the cost of energy would influence their decision to buy a more energy efficient home in the future, a fifth selected the prospect of future energy regulations impacting the value of their home, and another fifth said they would prefer a greener home and would pay more for it, if required.

Energy Performance Certificates (EPCs) are granted to new-build properties and existing homes when they are sold or let. Data is released weekly, making them a lead indicator for DLUHC’s annual net additions data.

The bulk of new builds have been granted a B rating since records began in 2008, but the proportion of B-rated homes has advanced significantly since then: from around 60% of all stock to 82% in Q2 of this year.

This is in sharp contrast to the energy efficiency of existing dwellings: in Q2 a negligible 0.2% received the top A grade, with the biggest proportion (47%) receiving a C-rating, followed by a D-rating (37%). These figures have been fairly static over the past few years, suggesting there has been no notable change in the energy efficiency of existing homes.

The latest EPC data also demonstrates that new housing supply remains robust, for now, with the number of new certificates granted to new homes holding steady in 2022-23 at 247,256, not far off the previous year’s 253,145. But a supply crunch is looming, as we explore in our June residential development update