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Climate change is one of the most significant challenges of our time. The existing housing stock is a crucial component in achieving international and national climate change targets through energy efficiency improvements. The private rental sector incorporates some of the worst performing housing. To address this, the UK has implemented the minimum energy efficiency standard, based on the energy performance certificate rating. However, the energy performance certificate has a number of criticisms in the UK and across the EU. This viewpoints paper discusses the primary criticisms of the EPC and whether these undermine the minimum energy efficiency standard.

This viewpoint paper draws on the recent work across academic, government and professional literature to develop a critique of the energy performance certificate and its underlying methodology as a basis on which to form the minimum energy efficiency standard.

The paper concludes that based on the current form of the energy performance certificate in the UK, the minimum energy efficiency standard is likely to unfairly advantage some landlords and penalise others. This has implications for landlords, tenants and the wider housing stock.

This paper presents a discussion of the new minimum energy efficiency standard based on the limitations of the energy performance certificate. It has implications for policymakers, researchers and practitioners in the private rental sector.

This study aims to investigate the relationship between energy performance and property sale price in the Belfast housing market. How energy efficiency is contributes to sale price and thus appraisal value is of growing concern. The obligatory measurement of energy efficiency in private dwellings seeks to encourage improvements in energy performance. This may be capitalised into property value and may stimulate demand for energy-efficient buildings. However, the relationship between energy performance and property value remains nebulous, complex and under-researched – in part due to data limitations.

Using a hedonic pricing specification, this paper measures the effect of energy performance certificates (EPCs) on residential property value. It examines the relationship between 3,797 residential sales transactions across the Belfast housing market, showing the percentage effect on property value with respect to energy performance.

The results indicate a small but positive relationship between better energy performance and higher selling prices. Nonetheless, the findings point towards strong preference, demand tastes and a complex intra-relationship between EPCs and their capitalisation into property value. Pertinently, the findings point towards any energy-efficient-related price effect affect to be marginal alongside more “quality”-based market behaviours.

Analogous with other studies, data deficiencies and a lack of incorporating price determining variables (missing determinants) such as heating type and glazing type introduces omitted variable bias and endogeneity problems within the model structure.

This paper contributes to emerging literature and policy debate surrounding the measurement and implementation of energy-efficiency certification through a greater understanding of energy performance characteristics in determining property value.

The role of energy efficiency and particularly energy performance certificates (EPCs) has emerged as a topical and important aspect of real estate markets. Various studies have been carried out investigating the perceived capitalisation effects of energy efficiency on property prices. There, however, remains divergence of opinion whether the capitalisation effect is truly in existence with extant research showing differing magnitudes of effects, if any. To date, no study (that the authors are aware of) has investigated the nature of the transition between EPC bands and price effects. The purpose of this study is to add to the research of the energy efficiency of housing to examine the nature of the likelihood of property characteristics being associated with higher EPC scores and value.

This research undertakes a suite of methodological tests to investigate the more latent relationships between EPC bands and pricing behaviour using 3,797 achieved sales prices within the Belfast housing market. Binary logit regression models are specified in conjunction with a Polytomous Universal Model to examine the likelihood of EPC bands falling within a particular property type and the likelihood of any pricing effects.

The findings show the differing property types to comprise very distinct and complex relationships in terms of price and EPC banding. The binary logit model estimations for both terrace properties and apartments reveal an increased likelihood to obtain higher EPC scores, with the semi-detached sector displaying a “mixed effect” with detached property revealing decreased probability of having superior energy performance and decreased likelihood of having poorer energy performance. The ordinal model estimations indicate that sales price comprises no relationship with energy performance, inferring that there is no increased probability of an increase in sales price with higher EPC rating.

This research offers new insights and focus on achieving a better understanding of the nexus between energy performance and property characteristics using alternative modelling approaches. This provides more exploratory insights into the complex relationships and offers awareness for policy discourse in terms of targeting properties which will tend to be poorer in energy efficiency.

A number of studies have investigated the relationship between energy performance certificates (EPCs) and house prices. A majority of studies have tended to model energy performance pricing effects within a traditional hedonic conditional mean estimate model. There has been limited analysis that has accounted for the relationship between EPCs and the effects across the pricing distribution. Moreover, there has been limited research examining the “standard cost improvements EPC score”, or “potential score”. Therefore, this paper aims to quantify and measure the dynamic effects of EPCs on house prices across the price spectrum and account for standardised cost-effective retrofit improvements.

Existing EPC studies produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price effect. The approach within this study applies a quantile regression approach to empirically estimate how quantiles of house prices respond differently to unitary changes in the proximal effects of EPCs and structural property characteristics across the conditional distribution of house prices. Using a data set of 1,476 achieved transaction prices, the quantile regression models apply both assessed EPC score and bands and further examine the potential EPC rating for improved energy performance based on an average energy cost improvement.

The findings show that EPCs are valued differently across the quantiles and that conditional quantiles are asymmetrical. Only property prices in the upper quantiles of the price distribution show significant capitalisation effects with energy performance, and only properties with higher EPC scores display positive significant effects at the higher end of the price distribution. There are also brown discount effects evident for lower-rated properties within F- and G-rated EPC properties at the higher end of the pricing distribution. Moreover, the potential energy efficiency rating (score) also shows increased effects with sales prices and appears to minimise any brown discount effects. The findings imply that energy performance is a complex feature that is not easily “averaged” for valuation effect purposes.

While numerous studies have investigated the pricing effects of EPCs, they have tended to provide a single estimate to determine the relationship with price. This paper extends the traditional analytical insights beyond the conditional mean estimate by examining the quantiles of the relationship between EPCs and house prices to enhance the understanding of this esoteric and complex issue. In addition, this research applies the assessed energy efficiency potential to establish whether effective cost improvements enhance the relationship with sales price and capitalisation effects.

The purpose of this paper is to assess the impact of the Energy Performance Certificate (EPC) on the Italian real estate market, focusing on old buildings. The contribution of EPC labels to house prices and to market liquidity was measured to analyze different aspects of the selling process.

A traditional hedonic model was used to explain the variables of listing price, transaction price, time on the market and bargaining outcome. In addition to EPC labels, the building construction period and the main features of apartments were included in the model. A sample of 879 transactions of old properties in Turin in 2011-2014 was considered.

A first hedonic model let us suppose that low EPC labels (E, F and G) were priced in the market although EPC labels explained only 6-8 per cent of price variation. A second full hedonic model, which included apartment characteristics, revealed that EPC labels had no impact on prices.

In Italy EPC has been mandatory for house transactions since 2009, so there are few studies on the effect of EPC on the Italian real estate market at least to our knowledge. Furthermore, unusually for the Italian context, in this paper also transaction prices were analyzed, in addition to the more frequently used listing prices.

Buildings contribute significantly to CO₂ production. They are also subject to considerable taxation based on value. Analysis shows that while similar attributes contribute to both value and CO₂ production, there is only a loose relationship between the two. If we wish to use taxation to affect policy change (drive energy efficiency behaviour), we are unlikely to achieve this using only the current tax base (value), or by increasing the tax take off this current tax base (unlike extra taxation of cigarettes to discourage smoking, for example). Taxation of buildings on the basis of energy efficiency is hampered by the lack of current evidence of performance. This paper aims to model the now-obligatory (at sale or letting) energy performance certificate (EPC) data to derive an acceptable appraisal model (marked to market, being the EPC scores) and deploys this to the entire population of properties. This provides an alternative tax base with which to model the effects of a tax base switch to energy efficiency and to understand the tax incidence effects of such a policy.

The research uses a multiplicative hedonic approach to model energy efficiency utilising EPC holding properties in a UK jurisdiction [Northern Ireland (NI)] as the sample. This model is then used to estimate discrete energy assessments for each property in the wider population, using attributes held in the domestic rating (property tax) database for NI (700,000+ properties). This produces a robust estimate of the EPC for every property in its current condition and its cost-effective improved condition. This energy assessment based tax base is further used to estimate a new millage rate and property tax bill (green property tax) which is compared against the existing property tax based on value to allow tax incidence changes to be analysed.

The findings show that such a policy would significantly redistribute the tax burden and would have a variety of expected and some unexpected effects. The results indicate that while assessing the energy performance of houses can be a complex process involving many parameters, much of the explanatory power can be achieved via a relatively small number of input variables, often already held by property tax jurisdictions. This offers the opportunity for useful housing stock modelling – such as the savings possible from power switching. The research also identifies that whilst urban areas display the expected “heat island” effect in terms of energy consumption, urban properties are on average more efficient than suburban/rural properties. This facilitates spatial targeting of policy messages and initiatives.

Analogous with other studies, data deficiencies introduce the risk of omitted variable bias. Modelling of the energy efficiency in the sample is limited to property attributes that are available for the wider population of properties. While this limits the modelling exercise, it is a perennial issue facing mass appraisal worldwide (where knowledge of the transacted sample attributes generally exceeds knowledge of the unsold properties). That said, the research demonstrates the benefits of sharing data and improving knowledge of the housing stock, as taxation databases would be stronger, augmented with EPC-derived property attributes for example.

The EPC lead in time for wide residential coverage is likely to be considerable. The paper contributes to emerging literature and policy debate surrounding the effect, performance measurement and implementation of energy efficiency certification, through a greater understanding of the sectorial and geographical dispersion of energy efficiency. It provides high level research to help guide policy and decision-making, identifying key locales where there is more of a physical problem and locations where there is more to gain in terms of targeting energy improvement and/or encouraging behavioural change. The paper also allows a glimpse of the implications of a change towards a taxation regime based on energy efficiency, which contributes to the debate surrounding the “greening” of property based taxes.

The Energy Performance of Buildings Directive (EPBD) 2002/91/EC introduced various obligatory requirements intended to achieve the reduction of use of energy resources in buildings. This directive had to be transposed into national legislation by the EU member states. Concurrently the European Committee for Standardisation developed a number of technical standards to assist member states to define the methodology for the calculation of the energy performance of buildings. The purpose of this paper is to present a comparative review of the relationship between the European directive and the standards, and the different country legislation and methodologies that have been implemented in Malta, Italy, Spain and Cyprus.

The analysis is based on a review of national legislation in the four states. Reference is also made to publications by the Concerted Action for the EPBD and to related publications by the national bodies responsible for the implementation of the EPBD. These include the Ministry for Economic Development in Italy, the Ministry of Commerce, Industry and Tourism in Cyprus, the Ministry for Resources and Rural Affairs in Malta, and the Ministries of Industry Tourism and Commerce and of Housing in Spain.

This paper analyses and compares the implementation of the directive using the above‐mentioned sources. In so doing, it focuses on general principles rather than on the specific technical requirements for the calculation method in the various states. The paper then considers the implementation of these general principles within each state before finally drawing conclusions about whether legislation relating to the original Directive 2002/91/EC is meeting its objectives and the implications relating to the requirements of the recast Directive 2010/31/EC.

The introduction of the directive in the states considered has taken place slowly and gradually over the last three to four years. There are few publications relating to the actual implementation of the directive, and this limits the possibility of comparison of sources.

The relationship between the EPBD and the milder climate experienced in the Mediterranean is considered to be of great importance, particularly since world temperatures are slowly rising. However, it is acknowledged that insufficient research has been carried out on the energy performance of buildings in this region. This paper investigates the existing legal structures that have been put into place to implement the EPBD and the effectiveness of this implementation to date.

This article seeks to investigate the interconnections between the expectations of the impact of energy certificates issued within the UK domestic building sector through the Energy Performance of Buildings Directive (EPBD) and the actual number and financial implications of the energy saving measures (ESMs) achieved.

The methodology uses two previously published surveys and compares these with a third independent survey by the authors focusing upon the discrepancies between planned action and implemented action, introducing the term human factor element (hfe).

The article concludes that annual carbon savings arising from implementation of the Energy Performance Certificate (EPC) may be as low as 73.4 ktC over the five year term of the Kyoto Protocol even though 44 per cent of energy saving measure costs of £200 million are recouped within the same time period and savings will continue for up to 40 years. Achieving annual savings of only 14.7 ktC by 2010, such a figure represents a mere 0.3 per cent of the annual domestic 4.8 MtC savings announced by the government in its 2006 Climate Change Programme.

Since the principal determinant in the uptake of ESMs is initial cost, it is considered that the EPBD is likely to remain an under‐performing instrument in the promotion of energy sufficiency until such time as other complementary provisions are introduced.

Sheds light upon the likely financial impact upon energy efficiency in domestic buildings by energy certificates.

This paper aims to focus on the assessment of a domestic property's energy performance status by a domestic energy assessor (DEA), to ascertain the possible underlying reasons for variability in the results of Energy Performance Certificates (EPCs). By variability, the authors mean discrepancies in assessment between different DEAs on similar properties. This is important because the uses for the EPC have been extended beyond their original function as an asset rating system, to include themes encompassing building policy decisions, building performance and the distribution of incentives and grants. Consequently, inaccuracies in EPC reporting will have a greater impact than may have been the case at the outset.

A case study approach involving the conducting of semi-structured interviews with 20 practicing DEAs was carried out, with transcribed recordings of the interview material subjected to thematic analysis. This formed part of a wider mixed methods study.

The results identify a wide range of underlying reasons for variability driven by issues in both practice and process, including conflicts of interests, the EPC auditing process, the default inputting of missing data by RdSAP where information may not be available/discoverable by the DEA, the quality and perception of EPCs and DEA training and experience.

The sample size of 20 is by definition limiting, and it is possible that different results would have been obtained from a different sample. Although thematic saturation from the analysis of the responses on the key question of whether EPCs are considered variable does mitigate this. The respondents were all in possession of five years or more experience and of carrying out EPCs for different purposes. Less experienced DEAs may inevitably have responded to questions differently. The thematic analysis gives the researcher control over the presentation of the results, and it is noted that this creates a potential for bias. The researcher is immersed in the world of construction and property, with regular contact with DEAs and EPCs, which may influence the perspective of the results.

The research identifies risks to the accuracy of EPCs. To this end, and with the specific research findings in mind, this research may be of interest to construction professionals with respect to EPC practice and procurement, to the Accrediting Bodies who audit EPCs, to the creators of RdSAP with respect to automated EPC inputs, to academics either at face value or for use in further research and to policy makers who may wish to consider RdSAP data in future with qualifiers or margins of error, or may even look to review the EPC as the instrument of choice for some applications.

There is much literature analysing the shortcomings and nuances of RdSAP results, and the software model that generates the EPC, but only very limited literature extending the discussion about RdSAP to its operator: the DEA. At the time of writing, there is no literature focusing directly on the DEA and its role within the EPC production process. Their role is more important now, given the expanding use of EPCs, and increased reliance on EPC data.

The paper aims to present the findings of a “situation review” of the Energy Performance of Buildings Directive (EPBD), focusing on energy performance certificates (EPCs) to highlight areas of specific importance for the UK property investment community. The paper is based on research commissioned by the Investment Property Forum (IPF) and funded through the IPF Research Programme (2006‐2009).

Interviews were undertaken with experts from the fields of property investment and building engineering. The interviews were undertaken with to identify: the current knowledge of EPCs in the property investment sector; key issues with practical implementation of the legislation; and perceptions of the potential impacts of legislation, particularly in relation to value stakeholder and behaviour.

The paper finds that, although the regulations have been published, there is still a need for clarification in the marketplace with regard to some of the detail of regulations and the certification process. The following areas are of most concern to property investors: costs of surveys; potential difficulties with the process; and a shortage of assessors. With respect to these impacts it is becoming clear that investors who have not yet started considering the EPBD and its requirements within their strategy are likely to face difficulties in the short term. The most significant value‐related impacts of EPBD are expected to be value differentiation of properties and “price chipping” against the rental or capital value of the property, where an occupier or potential purchaser will use the recommendations contained within an EPC to force a reduction in value. The latter is expected to emerge in the short term, whereas the former is expected to be realised over the medium to long term. Both these impacts have potentially significant implications for property investment holdings and also future investment behaviour.

The paper provides useful information the importance of EPCs.