A leading financial analyst says what are generally called “period properties” are set to become financial nightmares for landlords or owner occupiers alike.
And it’s down, of course, to spiralling energy prices.
Sarah Coles, senior personal finance analyst at business consultancy Hargreaves Lansdown, says: “The age of a property is the single biggest factor in determining how energy efficient it’s likely to be. Almost all homes built since 2012 in England and Wales have a high energy efficiency rating – compared with 12 per cent of those built before 1900 in England and 8% of those of the same age in Wales.
“The next most important factor is size. Flats and maisonettes are most likely to be in the most efficient bands and detached homes are the least likely to be. It means that big, detached Victorian homes are costing people dear.”
New data from the Nationwide suggests that energy bills for the least efficient homes are set to be double those for the most efficient homes – in the worst case, under the new price cap coming into effect next month, that’s a potential £550 per month.
Coles adds: “Anyone who has been in their home for a while…and is coming to the end of a fixed rate mortgage deal is in for a mortgage shock, because the rates are now significantly higher than when these two-year and five-year deals were locked in.
“It means trying to wrestle with hefty monthly mortgage payments while trapped under the weight of bloated energy bills.
“For older people, who are still in the family home, the pressure of energy bills may make it impossible to stay.
“Anyone on a fixed retirement income faces a challenge when prices rise, and for many people these higher energy bills will be insurmountable.
“This spike in energy prices may force them to leave behind a home they love because they can’t afford to stay.”
Nationwide chief economist Robert Gardner says: “We’ve looked at the impact of rising energy costs on average bills for properties with different energy efficiency ratings (as reported on energy performance certificates). Currently (based on the April 2022 price cap), the most energy efficient properties (those rated A-C) pay £1,700 per year, whilst the least efficient (those rated F-G) typically see bills over twice as high at c.£3,900 p.a.
“As things stand, from October, average bills for D-rated properties (the most common type) are set to rise by just over £1,250 a year, even after taking account of the government’s £400 discount. Those in properties rated A-C will see average bills increase by nearly £1,000 a year (or over £80 per month).
“E-rated properties will see an increase of over £1,700 per year (c. £150 per month), whilst those in the least energy efficient properties (F/G) face a staggering £2,700 rise (£225 per month). While only a small proportion of the stock is rated F/G (approximately two per cent of those with mortgages), the challenges for these households appear particularly acute.
“To provide some further context of the scale of these increases, we’ve calculated the equivalent interest rate rise based on a typical outstanding mortgage. For ease of comparison, we’ve used the same mortgage balance and term for each EPC rating. Overall, the average increase is equivalent to a 1.36 per cent rise in interest rates, but around 1% for A to C-rated properties, 2% for an E-rated property and nearly three per cent for an F/G-rated property.
“Moreover, these increases in energy costs come at a time when mortgage interest rates are also rising. While most mortgages (around 85 per cent) are now on fixed rates, protecting borrowers in the short term, those who are looking to refinance face a significant rise in borrowing costs if mortgage rates stay at current levels.”
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A detached Victorian house may well cost more 💰, but I can tell you from experience, these older and larger homes are a privilege to live in, I love my home and would not move into a tiny “ Euro” box for anyone…. Big rooms with room for decent furniture, high ceilings for a sense of space. The prices are higher to run it, but that is what I have worked for.
What happened to choice? By all means give people the information about energy efficiency (but please make it accurate) and then let them choose. Some people waste there money on fast cars or foreign holidays - both of which pollute the atmosphere - I choose to heat my period home!
My money - my choice!
Mmmm - not sure about this -way too simplistic - a neighbour recently told me they moved from a newbuild “eco” house with the air source heat pump to a 1950s bungalow that needs work and the bungalow costs them a fraction of the amount that the eco house cost to run
A 'nightmare', well it's how you look at things:
I have a 3-bed rental, built in 1959 and it's not Listed. It was an EPC Grade E and my tenant was complaining of high energy bills last winter.
1. I got a domestic EPC assessor to prepare a draft 'as is' EPC and a draft 'predicted' EPC for the house based on the refurb I was planning to do.
2. My handyman installed 100mm of loft insulation between the joists and then an extra 200mm layer of loft insulation at right angles across the joists. This is current Building Regs standard for a new house. Loft insulation is £24 for a big roll at B&Q
3. I had a Google Nest thermostat/timer installed. I ordered this direct from Google and a professional installer fitted it within the price
4. My plumber installed TRVs on all the rads and showed the tenant how to use them
5. My electrician fitted a 'kill switch' by the front door wired into the lighting circuits of the Distribution Board. As the tenant leaves the house one push of the button turns off all the lights in the house. Very simple and effective
6. My handyman changed all non-LED lamps over to Philip LED lamps
7. Pioneer Insulation fitted external wall insulation around the walls. This was a big investment but the house now looks brand new and it's a unit that I'm holding long-term.
8. I couldn't justify the expense of new windows so I bought 'poor man's' secondary glazing from a small British company called WindowSkin. I used their product before to cover a large sash window in the winter in a draughty office that I use to rent. It's a custom cut piece of totally clear Perspex that clips on the inside of the window frame in winter to cut out 100% of window draughts. Stores under a bed in the summer.
9. My EPC assessor came back after I had completed these works and gave the house an EPC Grade B. This certificate stays on the national database for the next 10-years.
The above project took me about 10 x phone-calls and 2 x site visits to sort out. It really wasn't that onerous.
I'm now close to finishing exactly the same package of works on my own family home.
Martin, congratulations but I though that a ‘B’ wouldn’t be available without an alternative energy source.
Thanks Michael. Remember that a domestic EPC has always been a financial cost of heating and lighting the house/flat calculation. Grade A means it's cheap to run - Grade G means it's very expensive to run. Gas per kilowatt hour is still considerably cheaper to buy than a kilowatt hour of electricity that's why the modern combi gas boiler I have in this particular unit EPCs so well, especially with all the insulation I have now packed-in. BUT burning gas is not that great for planet Earth so I'm sure that over the long-term the Government will start adding tax to gas and try to narrow the gap and make electricity more affordable. An electric heat pump is, at best, 'running cost neutral' compared to a modern gas boiler
I've just had an EPC done on an end Victorian terraced house, 2 points off a 'C' next step is external insulation to the gable wall, which will be expensive, I'll wait on that one until we know more, not passed into law yet, and there could be better less expensive products come along .
Martin, l think your EPC assessor is being rather optimistic.No mention of heating source here or floor insulation. I was advised to use a certain EPC assessor on a new build, by the building inspector. She made a highly optimistic assessment. Later on l put wool based carpet in the lounge, and that definitely reduced the fuel bills even though their was 100 mm of good insulation under the tight fitting particle board.
The draft predicted EPC, that I had prepared before the refurb, showed that I would get an EPC Grade B by one point (no need to spend anymore than necessary). The EPC assessor has recently returned for the verification site survey and given it a Lodged EPC, as predicted it is a Grade B score 81, a Grade B by one point.
I had already got my handyman to install solid insulation board between the joists on the ground floor prior to recarpeting that I did a few years ago.
My mortgage broker expects to be able to get a better rate for me now that I have a 10-year valid EPC Grade B when I have to refinance next year.
I was surprised by how easy the whole project has been.
I have a that I built 12 years ago to the up to date Building Regs so the time, with all the insulation’s and sound tests which was a B, 10 years on I got a C saying I needed to have an alternative source of energy, which I took it to mean Solar Panels, ground source heat pump or Air unit source ?.
I would suggest a conversation with the domestic energy assessor that you used to clarify this point Michael. I have a very good working relationship with the domestic EPC assessor that I use in the Thames Valley. I pay him extra for the valuable advice that he's given to me over the years.
EPC Grade C is still good and makes your unit MEES 2025 Compliant (subject to the Government's proposal becoming firm Regulations). Sounds like you have created a well insulated, efficient home that I'm sure your tenant will value this autumn and winter.
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