The Government’s energy efficiency drive will force 15 million homeowners to each spend thousands of pounds on home improvements.
Around 60pc of all homes in England and Wales currently have an Energy Performance Certificate rating of below C, according to lender Halifax, with older, bigger properties the worst offenders.
The Government wants all homes to be rated at least EPC band C by 2035 as part of its drive for net-zero emissions. The plans will require millions of households to spend substantial sums, which can easily run into the thousands, on improvements. This outlay comes just as they are hit by the worst cost of living crisis in a generation.
However, failing to make upgrades could prove far more costly. Banks and building societies will be required to have an average band C rating across their lending portfolios by 2030, meaning owners of less efficient properties are likely to face higher mortgage costs as banks incentivise customers to upgrade their homes.
Experts have warned poorly-performing homes which fail to meet the EPC target will fall in value once the new rules are enforced and, in the worst case scenario, could become unmortgageable.
Owners of detached or older homes face the biggest bills to upgrade their homes in line with the Government’s green plans. The average EPC rating of the 4.2 million homes built before the 20th century is E, compared with an average B rating for properties built after 2012, according to Halifax.
Meanwhile, only a fifth of all detached homes across England and Wales have a rating of at least C. Halifax said owners of these properties risked spending thousands in extra fuel costs after the energy price cap rises to £1,971 in April.
Andrew Asaam, of the bank, said households would be “spending more to live in colder homes”.
“We recognise that the cost of making energy improvements is not inconsiderable for most and the rising cost of living means making these investments now will be difficult for many.
“But there are significant benefits in making energy efficiency improvements through lower fuel bills, warmer homes and increasing the value of your home,” he said.
Halifax estimated improving a home’s EPC rating by one band could save £250 a year in energy costs and add tens of thousands of pounds to its value.
But the EPC system is fraught with pitfalls. Telegraph Money has previously warned homeowners risked spending a small fortune on eco works that could make their homes less valuable, thanks to flawed ratings system.
EPC grading is based on bills, rather than carbon output, which incentivises the use of gas over electricity. Failings in the rules mean homeowners could spend thousands of pounds on improvements, such as installing heat pumps, only to later discover the works had lowered their energy rating.