Households across the UK could reduce annual energy bills by around £400 by improving home energy efficiency, according to new analysis referenced by Nationwide. The findings highlight a growing gap between potential savings on energy bills and how much those savings are reflected in property prices.
While energy-efficient upgrades can significantly cut running costs, the research suggests that the housing market is only partially pricing in those benefits. As a result, homeowners may see clear savings on bills without a matching increase in property value.
Savings
Nationwide’s analysis suggests that upgrading a typical home to an Energy Performance Certificate (EPC) rating of C could lower annual energy bills by about £400. This level has become a policy benchmark in the UK, with the government aiming for most homes to reach EPC band C by 2035.
However, achieving that target varies widely in cost depending on the condition of the property. Older homes or poorly insulated buildings often require more extensive work, making upgrades more expensive upfront.
Upgrades
Energy improvements generally fall into three broad categories based on cost and impact.
Low-cost measures include:
- LED lighting
- Smart thermostats and heating controls
- Basic insulation improvements
Mid-range upgrades include:
- Loft insulation
- Cavity wall insulation
- Double or triple glazing
- Boiler replacement
Higher-cost improvements typically involve:
- Heat pump installation
- Solar panel systems
- Home battery storage
These measures can significantly reduce long-term energy consumption, but the upfront investment can run into several thousand pounds.
Costs
Nationwide estimates that bringing a typical home up to EPC band C costs around £8,100 on average. For lower-rated homes, the cost can be substantially higher.
At the bottom end of the scale, improving homes rated EPC F or G to higher standards may exceed £25,000 in total expenditure. However, these properties also tend to deliver the largest energy savings once upgraded.
| EPC improvement | Estimated annual savings | Typical upgrade cost |
|---|---|---|
| D to C | ~£400 | ~£8,100 |
| F/G to higher rating | ~£1,780 | £25,000+ |
Market
Despite clear differences in running costs, energy efficiency has a limited impact on current UK house prices. Nationwide reports that homes rated A or B command only about a 1.7% price premium compared with similar properties rated D.
In contrast, poorly performing homes rated F or G tend to sell for around 3.5% less than comparable D-rated properties. This suggests that while there is some price adjustment, it is relatively modest compared with the potential savings on energy bills.
Andrew Harvey, senior economist at Nationwide, noted that energy performance is influencing prices, but only to a limited extent for most owner-occupiers.
Housing
The UK housing stock has become more efficient over time. Around 40% of homes are now rated EPC C or above, compared with just 14% in 2009. However, the majority of properties still fall below the government’s target threshold.
Roughly 60% of homes are currently rated D or lower, indicating that large-scale improvements would be required to meet long-term efficiency goals.
This uneven distribution highlights the challenge facing both homeowners and policymakers as energy standards tighten.
Policy
Government policy aims to improve average home energy efficiency to at least EPC band C by 2035. This forms part of broader efforts to reduce household emissions and lower overall energy demand.
While subsidies and incentives exist in some cases, much of the cost currently falls on homeowners. As a result, uptake of more expensive improvements such as heat pumps and solar installations remains uneven.
Outlook
Nationwide suggests that the value placed on energy efficiency is likely to increase over time. If policy support strengthens or energy prices remain elevated, buyers may begin to assign more weight to running costs when assessing property value.
For now, however, the market appears to be reflecting only a small portion of the long-term financial benefits associated with energy-efficient homes.
FAQs
How much can UK households save by improving energy efficiency?
Around £400 per year for a typical home upgraded to EPC C.
What is the average cost of upgrading a home to EPC C?
It is estimated at about £8,100 depending on the property.
Do energy-efficient homes sell for much more?
Only slightly, around a 1.7% price premium for A or B ratings.
Which homes benefit most from upgrades?
Poorly rated F or G homes see the largest savings.
