Impact of Building Energy Rating On Property Values

The BER (Building Energy Rating) impacts the value of a property. Especially in recent years with buyers looking to purchase energy efficient homes. According to a recent estimate from the Sustainable Energy Authority of Ireland (SEAI), every grade you move up on the BER will increase the value of the property value by 1 pc.

There’s been something of a revolution in our approach to building energy ratings a decade on from their introduction. Estate Agent Majella Galvin explains why.

You wouldn’t’ think it but it’s over ten years since Building Energy Ratings (BERs) quietly made their entrance onto the Irish property scene. Initially, a mere footnote in property brochures, BER ratings have now stepped into the limelight, becoming a key consideration for those seeking to purchase or rent a property. What triggered this transformation? There’s no single answer to that, rather it’s a fusion of concerns with heightened environmental awareness and recognition of the pressing need to tackle climate change, rising energy costs and the allure of green incentives all playing a part.

As a result, buyers’ interests in a property’s BER rating have undergone a seismic shift in recent years. Moreover, the possibility of securing favourable green interest rates has acted as a catalyst, escalating the demand for energy-efficient homes. A green mortgage is a mortgage which offers a lower interest rate to people who are buying a more energy efficient home. In most cases, to qualify for a green mortgage, you need to be buying a home with a BER of at least B3 or higher.

Today, knowing a property’s BER isn’t just a casual inquiry; it’s often the first question buyers pose. This shift is rooted in an understanding of how energy efficiency will shape our future. And a mere BER rating doesn’t suffice anymore—what buyers crave is the comprehensive BER Advisory Report. This report isn’t just about numbers; it’s a guidebook, revealing potential enhancements that offer a roadmap to improving a property’s energy efficiency as well as an indispensable tool for future budgeting and planning improvements.

The Most Desired Properties

Today energy-efficient homes are among the most coveted property types. And that trend is only going to intensify. And it’s not just among first-time buyers lured by green mortgage rates. Downsizers, too, are actively seeking safe havens which combine a blend of comfort, sustainability, reduced energy costs as well as a smaller environmental footprint.

The price disparity between energy-efficient homes (rated B or higher) and their non-efficient counterparts (rated C or lower) is continuing to widen. Research from Geowox, a Dublin based company which specialises in residential property valuations for financial institutions, indicates that valuations for homes which are energy efficient are 26.6% higher on average. According to recent CSO figures the median price of a home in Ireland is now €320,000, so that 26.6% figure translates in euro terms to an average price variance of circa €85,000. These homes have also experienced a noteworthy annual price growth signalling their increasing attractiveness and value in the present market.

As someone working at the property coalface, I have witnessed firsthand the burgeoning demand for energy-efficient homes. Buyers are ready to invest more in properties that will deliver long-term savings on operational costs. However, the journey from a low BER to an A or B rating, despite available grants, isn’t always straight forward and is one that has been made more challenging due to surging construction material costs and labour shortages.

Energy Efficiency = Higher Value

For those contemplating selling their property, leveraging its energy efficiency can prove highly beneficial. The difference you see when potential buyers walk into a draughty, cold, door banging property and a toasty, comfortable one where the future cost savings and long-term value appreciation are obvious to see, is like night and day. To enhance your property’s allure, consider energy-efficient improvements like insulation upgrades, enhanced Heating, Ventilation and Air Conditioning systems (HVAC), or integrating renewable energy sources.

Before putting your property on the market, do your research into what grants are available to make BER upgrades more cost-effective. The Sustainable Energy Authority of Ireland (SEAI) is your go-to hub for all BER-related queries and you’ll find a huge amount of information at Home – Sustainable Energy Authority Of Ireland | SEAI And remember to keep all documentation related to improvements to hand; those certificates, receipts, invoices will help to showcase your property’s energy efficiency to prospective buyers.

Even if you’re on a budget, there’s room for improvement! Simple measures like draught-proofing, lighting upgrades, insulating your attic and the hot water cylinder, or installing a thermostat can substantially enhance your BER rating and draw in potential buyers. Of course, improving a building’s energy efficiency isn’t the exclusive domain of residential markets; it holds equal sway in commercial settings. If you have your own office – or as many people are doing now, have built, or are planning to build a home office – the same principles outlined above apply. Indeed, if you are renting out office space it might be time to consider upgrading its energy efficiency and increase its attractiveness to clients who are looking to avail of green leases and lower operational costs. If on the other hand you rent out office space, you’ll be aware of the increased weight workers now attach to a healthy working environment and the desire to work in modern, sustainable, accessible and energy efficient offices. Most potential buyers, especially first-time ones, have already embraced the green revolution. If you are selling you should too and position your property as a prime choice for eco-conscious buyers eyeing both environmental and economic benefits. The future of the planet unmistakably aligns with green practices. From extreme weather events abroad and closer to home, the signs are all there. Our homes and the property market more generally have a key role to play in helping to tackle climate change. We might not have known that when BER ratings were introduced without any fanfare in 2013. We do now.

Author: Majella Galvin
This article was published on The Examiner December 31st 2023

Majella Galvin is Chair of the Southern Region of the Society of Chartered Surveyors Ireland. A chartered surveyor, estate agent and registered valuer at DNG Galvin auctioneers Bandon, she has been working in the property sector for over a decade – www.dnggalvin.ie

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