Example 2

First Time buyer for a Victorian Terrace property in 2015 for £178,000.  They were expecting it to be higher but although there was nothing specific wrong with the house (no roof leaks, rot etc) but has come down from £200,000 because of the major works for insulation needed.  the property was going to need major work for insulation.  Internal wall insulation (£10,000), PV panels (£4000), ASHP (£5000), but probably other things too.  It was decided that the mortgage to buy the house was easily covered by their incomes and deposit (partly from the bank of Mum and Dad).  The extra cost of the house energy efficiency factors would be sought with the same total price (i.e. house plus insulation costs) for the house of £200,000 that they had been expecting from the beginning!  In fact they would simply be making money on low utility bills and much of  those savings used to pay for the insulation mortgage in a predictable way.  Also the payment of  the loan for insulation would be paid by the low utility bills hence the top £20,000 of what they were expecting in their mortgage does not appear at all.  

Buying a semi-detached house for £230,000.  They are selling their previous one, for £230,000 because although the house being sold needs full insulation, it also had a small garden.  The one they are buying has a larger garden.  They had bought the original one in 2010 so they still owed £25,000 on the mortgage but that had been built in 1958.  So the house they sold only was getting them £230,000 that was the same price they expected to pay for the new one.  The Valuers explained that all the insulation work needed to be done on the house they were buying and it would cost around £20,000 but as of then the ‘value’ of it would be back to the £230,000.  So the money that they brought from the older house, a £20,000 mortgage covered by the increase in value would work.  Over the following 20 years the money saved on energy bill would be paying off that mortgage.  However the remaining £25,000 mortgage from the previous house would simply follow on to this house they had bought.   If they were to sell the house again, perhaps after 8 years, the full cost of insulation would be paid by the increased value of the house (due to the insulation).  The £20,000 borrowed  debt for insulation would have been fully repaid but because some payments for the loan had been towards capital repayment, so they would be £5,000 better off.  That extra money could be carried over to the next house.

Figure  4.  Ongoing payments against a loan for the insulation can avoid an increase in a mortgage.  If the loan is taken as a mortgage increase then much of that is paid for by the decrease seen in utility bills

This may see almost like a free lunch but really means that it is easily worthwhile carrying out insulation as savings seen are good.

A couple had already bought a terraced house for the full £200,000 in 2025 as indicated by the Valuer.  They had no plans at this time to move.  However, after the Government action (in 2026) demanding that if they did sell the house it would be worth much less because a new buyer must fully insulate within 4 years (at a cost, they guessed, of around £20,000) and bringing the house value down to £180,000.  To the couple this was a huge loss and hundreds of thousands of other people would be finding themselves in the same position.  They had taken out a mortgage to cover the original £200,000 cost but they now only had property valued at £180,000.  When they did sell, they would take that mortgage with them but their new house might need insulation also so there would be another cost.   There is a possibility that they could insulate their house by expanding their mortgage (with a guarantee from the Government) and pay that off over 20 years using the lower utility bills as the source.   In fact they did insulate the house, with a loan at 4% pa, and over the following 10ys they owed half as much and the value of the extra loan had been ‘inflated away’ (down 25%).  So, as a result the house had gone up in value to £200,000 due to the insulation and up again to £240,000 due to inflation.  So the overall loss was minor.  At the end of the 10 years before rebuying they had not paid off their house mortgage and about half of the insulation mortgage but the new house was worth more and both  mortgage simply rolled on to the new building (which should be already insulated).   

This may be seen in houses bought up to 5 years before they wanted to sell.  This may be considered as a cost to the Treasury but this is unsure currently.   

Similarly a couple bought a house within 3-4 years of the political action.  A Victorian terrace for £200,000.  The house was not insulated when buying but they were very worried as the price if they sold shortly after the insulation law was brought in would be a dramatic amount lower.  e.g. bought for £200,000  in 2024, and when they wanted to sell in 2028 it was worth about £20,000 less than the  former ‘uninsulated’ valuation.  So just the Governmental action would make the owner £20,000 worse off.  The best answer might be  that they would insulate while they were living in the house, and put in the energy efficiency  items.  It did not have a cavity wall and it was difficult to do internal wall insulation even this did not take long.  As soon as that was done the value jumped back up to the price they originally paid (plus inflation), but the cost for the work would be carried over to the next house, which might this time be already energy efficient one (and so the costs paid on the loan being paid off by lower energy bills).  In fact the house owner is little worse off than before.    Worries to the couple would be partially removed by a guarantee of the insulation debt to the bank by the Treasury.

A couple want to buy a fully insulated terraced house for £200,000 in 2028.   The house is near to the town centre, but little parking in front on the road, but a close school.  It has 3 bedrooms and prior to 2026 when the new regulations requiring insulation were brought in concerning insulation it was valued at £200,000.  They are selling their house nearby for £180,000 because a buyer would need to insulate.  They have no added income from working and a large part of the £180,000 would have been the deposit put on the house to buy.  The Mortgage company tells them that they must pay a reliable extra mortgage payment for the £20,000 that is needed to fund the insulation.  This will need to be guaranteed.  Should the buyer default then the house would be worth enough but their default bill would be taken from the deposit.  Because it does not need insulation they would be seeing much smaller (about 60% less) utility bills and it must be calculated to show, at the interest rate agreed with the Mortgage company would cover this saving to be seen as their income and can be paid to the mortgage company.  For example current gas and electricity bills adding up to £2000 pa would drop to £800 pa but they must pay £1,200 for the mortgage.  At an interest rate of 4% (as hoped by the current Government) this would represent the £800 annually for the interest and that would allow full paying for the mortgage debt in around 30yr (as time passes the ongoing debt decreases so a greater percentage of the payment will pay off the debt).  The couple consider this and decide that it can go ahead.  This is effectively just moving house from a poorly insulated to a well insulated house at the same price as it had been worth prior to the Government action.  It also shows why insulated houses are worth more.

Please consider the Examples page 1 for information about houses changing hands earlier.

Academic References for both Examples pages

https://www.theguardian.com/environment/2015/jul/23/uk-ceases-financing-of-green-deal (A series of house improvement deals that were stopped or cut by the Cameron Government)

https://www.gov.uk/government/news/five-reasons-to-get-a-heat-pump.  Five Reasons to get a heat pump with grant from the Government.

Sibilla M , Kurul E.  A Review of Transdiscipinary Approaches.  5th International Conference on Architecture and the Built Environment. 22-24 May 2018 Venice (concerning retrofitting)

All Party Group for Excellence in the Built Environment . Report from the Commission of Inquiry into Sustainable Construction and the Green Deal. London: UK House of Commons; 2013. Re-energising the Green Agenda.

Chiu LF, Lowe R, Raslan R, Altamirano-Medina H, Wingfield J. A socio-technical approach to post-occupancy evaluation: interactive adaptability in domestic retrofit. Build Res Info. 2014;42(5):574–590.

Bobrova, Y. Homeowner motivation, knowledge and involvement in domestic energy retrofit. Environmental Change Institute, University of Oxford. 2022. (not fully published)

Ebrahimigharehbaghi S, Quian Q., et al. Municipal governance and energy retrofitting of owner-occupied homes in the Netherlands. Energy & Buildings 274. 112423. 2022

Polzin F, Flotow P, Nolden C. What encourages local authorities to engage with energy performance contracting for retrofitting? Evidence from German municipalities.  Energy Policy, 94, 317–330, 2016.

Wilsona C, Cranea L, Chryssochoidis G. Why do homeowners renovate energy efficiently? Contrasting perspectives and implications for policy. Energy Research & Social Science 7. 12–22. 2015

Few J, Manouseli D, et al.  The over-prediction of energy use by EPCs in Great Britain: A comparison of EPC-modelled and metered primary energy use intensity.  Energy and Building, 288, 113024. 2023.  

European Green Deal: see Wikipedia. 

Academic and Technical Assessment 

Academic taking of specific examples (age of building, age of owner, incomes, parts of the UK) and assessment of examples of what factors modify these examples.  

Assessment of long term savings or short term loss in these examples.  For example, during high utility prices currently poorer people in poorly insulated houses just cant spend more than a certain amount heating their house and so their savings on insulation would be less after insulating. 

There should be an assessment of the changes that have taken place every 5 years.  This would include assessment of the work carried out, the warmth of the house, any change to the owner (health, work, viewpoint) anxiety about the system. 

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