Is the building market ready to value energy efficiency?
In the mist of European and national legislation for energy efficiency improvements in buildings, there is an unavoidable discrepancy created by the readjustment of the market and all concerned actors. These requirements are supposed to motivate designers, developers, real-estate managers and users to integrate considerations related to energy savings into their way of doing business. But exactly how successful have these endeavours been?
The example of Energy Performance Certificates (EPCs) can point to a market trend. The main aim of an EPC is to act as an information tool for building owners, occupiers and real-estate actors, displaying the building level of energy consumption. Arguably this makes the EPC a powerful market tool to drive up demand for energy efficiency in buildings by targeting such improvements as a decisionmaking criterion in real-estate transactions, and by providing recommendations for a costeffective upgrading of the energy performance. But there are still some gaps in fulfilling the full potential of the EPC scheme.
A recent survey1, conducted among real-estate agents from 8 Member States2 and with over 610 respondents, points to a difficult time for the proper use of EPCs as instruments that create market demand. Real-estate agents were asked to share their opinion on energy certification and its influence on the realestate market. More specifically, agents were asked for their professional opinion on the main factors that households consider when selecting properties to rent or buy.
The main issues covered by the survey touched upon the following aspects: the level of knowledge about EPCs as well as on the EPBD3; factors considered whilst purchasing or letting a property; evaluating the usefulness and credibility of EPCs; connection between the EPC and the exposure time of a property on the market and barriers to a comprehensive implementation of the EPC system.
The analysis of the survey answers points to a set of significant findings. While energy performance certification is compulsory in most of the surveyed countries, there are still exceptions to the rule. Moreover, while EPCs are compulsory, 6% of the respondents indicated they were never necessary when making a transaction in Poland.
Real-estate agents rate quite low the usefulness of EPCs, only slightly above one fourth of them saying otherwise. This is not surprising since there is no distinguishable connection between the exposure time of a property on the market and its EPC class. In the opinion of those questioned, a higher indicator of energy performance for a building doesn't translate into greater interest in its acquisition (Figure 3).
Most of the answers confirm that there is a lack of knowledge about the usefulness of an EPC. Thus, the main elements taken into account when purchasing or letting a property remain the location, price and size. Though, agents are aware of the benefits of having a high class EPC pointing to lower energy costs and a better technical condition of the building.
It is important to note that most people can make rational economic choices, like choosing a property with a high EPC class, if they have the means to do so. The benefits of choosing a property that in the long run will save on the energy bills have to be made more obvious to the general customer. This way a good EPC can be another instrument in the tool box of real-estate agents to inform their clients about the characteristics of a property.
But the issue remains the lack of confidence in the reliability of EPC data which many respondents to the survey noted. It seems that perception on this matter makes all the difference. People will only adjust their behaviour rationally when confronted with credible information. The lack of a monitoring and compliance system decreases, and rightly so, the credibility of the EPC scheme. When confronted with unreliable data, the market will not welcome a failing instrument with open arms.
In order to ensure a high quality of energy performance certifications, an independent control system was introduced through the EPBD recast (Art. 18). This EU measure seems to suffer some delays before being properly implemented on the ground. The level of awareness of these relevant EU Directives is quite low among the survey participants.
Considering the example of the EPC scheme there is ample reason to argue for an inconsistency in the pace in which the market is integrating tools that are supposed to encourage energy performance improvements in buildings. The survey hinted to a larger issue - we have proven technology, financial schemes and the tools to encourage investments in energy efficiency in buildings, but a largescale uptake of these approaches is missing.
Maybe a next step to ensure proper market uptake could be to set up a more reliable EPC quality check system and raise awareness among stakeholders about the benefits of using EPCs. A good EPC rating can lead to the increase of the property value and to reduced energy bills.
It seems that a major problem on the ground is the lack of trustworthy EPCs. This shows once more the need for stricter requirements for the qualification and/or accreditation of experts as well as for a system that monitors compliance.
1. The survey was conducted within the framework of the EU funded project ZEBRA2020. The survey analysis is available at www.zebra2020.eu
2. Austria, France, Germany, Italy, Norway, Poland, Romania and Spain
3. Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (recast)