Flawed energy ratings corrupting Britain’s house prices

‘Guesswork’ green scores condemn homeowners to costly upgrades or collapsing values

• Investigation Reveals: Flawed Energy Ratings System Undermining British Property Market
• Energy Performance Certificates Found to Be Based on “Guesswork” and Poor Training
• An extensive investigation has revealed that Britain’s property market is being significantly distorted by deeply flawed energy efficiency ratings, with evidence suggesting that poorly trained assessors are using “guesswork” to determine scores that can dramatically impact house prices.

Impact on Property Values and Lending

The implications of these findings are far-reaching, particularly as Ed Miliband, in his capacity as energy secretary, pushes for all rental properties to achieve adequate efficiency ratings by decade’s end. This mandate effectively presents landlords with an stark choice: invest in costly upgrades or divest their properties.

The situation is further complicated by the financial sector’s response, as homeowners bearing poor Energy Performance Certificate (EPC) ratings now face increased mortgage costs. Leading financial institutions have begun offering preferential rates to properties with superior environmental credentials, creating a two-tier lending market.

Key Investigation Findings

The investigation has uncovered several critical issues plaguing the current system:

### Training and Assessment Quality
Most concerning is the revelation that assessors require merely three days of training before being permitted to conduct evaluations that can impact property values by thousands of pounds. The investigation found that one of Britain’s premier assessment providers charges £1,139 for a fully remote three-day course, with no prior experience necessary to become a Domestic Energy Assessor (DEA).

### Inconsistent Evaluations
Perhaps most alarming is the discovery that nearly identical properties frequently receive markedly different ratings. These discrepancies persist despite the existence of an error review system, which, troublingly, is conducted by staff working remotely without physical property inspections.

Systematic Manipulation
Evidence has emerged of widespread “gaming” of the ratings system, with some assessors allegedly manipulating scores to help property owners access government grants or influence property values. Research conducted by the University of Salford has documented numerous instances of deliberate misrepresentation.

Financial Implications

The financial consequences of these flawed assessments are substantial. According to estate agent Knight Frank, improving a property’s rating from D to C could increase its value by approximately 3%, translating to an average increase of £9,000. This creates a significant financial incentive for manipulation of the system.

Case Studies

The Edinburgh Landlord
Ian Forbes, a buy-to-let landlord in Edinburgh, experienced these inconsistencies firsthand when attempting to remortgage his £300,000 flat. Despite the property being less than two decades old, it received a D grade, potentially increasing his borrowing costs. Upon investigation, Forbes discovered the assessor had erroneously used notes from an entirely different property, highlighting the system’s vulnerability to basic errors.

The Leeds Development
Dr Ian Roberts, an engineer from Chesterfield, uncovered particularly striking evidence of assessment inconsistencies in Leeds. His investigation of 18 nearly identical flats in a single block revealed ratings ranging from D to B. In one particularly egregious case, the same flat was recorded with dramatically different floor areas in separate assessments – a discrepancy equivalent to an entire bedroom.

Political Response

Reform party leader Nigel Farage has taken a strong stance against the current system, pledging to abolish what he terms “not fit for purpose” certificates. He argues that the EPC system, introduced to comply with EU regulations, is particularly unsuitable for Britain’s older housing stock and may actually result in increased energy costs for many properties.

Banking Sector Stance

Despite political uncertainty surrounding EPC targets for landlords, major financial institutions including Nationwide and NatWest have maintained their commitment to ensuring 50% of their mortgage customers’ properties achieve high energy efficiency ratings by 2030.

Expert Analysis

Dr Toby Gledhill’s research has revealed concerning patterns in the assessment process. His study found that twelve out of twenty interviewed assessors admitted to witnessing “deliberate misrepresentation of data.” The research also indicated that even experienced assessors with professional qualifications were prone to making significant errors.

Industry Response

Tom Garrigan of the Building Services Research and Information Association has highlighted the systemic nature of these issues, noting that errors as substantial as 10-square-metre discrepancies in measurement make a “mockery of the whole thing.”

Future Implications

The current certificates remain valid for ten years and typically cost between £35 and £120. However, experts suggest that necessary reforms to address these issues could significantly increase assessment costs. Dr Gledhill’s research indicates that stricter standards and enhanced oversight might lead to higher fees through basic supply and demand mechanics.

Government Position

A government spokesperson has acknowledged the need for improvement, stating: “We recognise that the assessment and auditing of EPC ratings needs to be improved, which is why we are consulting on plans to upgrade the system. This will deliver more accurate ratings, help people better manage their energy bills and give them the confidence they need to improve the energy performance of their homes.”

Industry Defence

The Property Energy Professionals Association has defended the system, asserting that the “overwhelming majority” of energy assessors meet industry standards and perform their duties professionally. They emphasise that the recommended qualification period is actually 250 hours and that occasional errors are not unique to energy assessment.

Summary

As Britain continues its push toward net-zero emissions, the integrity of the EPC system becomes increasingly crucial. The current investigation suggests that fundamental reforms may be necessary to ensure these certificates serve their intended purpose of promoting energy efficiency without unfairly penalising property owners or creating opportunities for manipulation.

* Energy Performance Certificates (EPCs) are severely flawed due to poorly trained assessors using “guesswork,” leading to significant distortions in UK house prices. A simple grade improvement from D to C can add approximately £9,000 (3%) to a property’s value.

* Assessors can become qualified with just three days of remote training costing £1,139, with no prior experience required. Experts consider this training “insufficient,” yet even experienced assessors make similar levels of errors.

* Major inconsistencies have been documented, including cases where identical flats in the same building received wildly different ratings (ranging from B to D). In one instance, the same flat was recorded with two different floor areas varying by the size of a bedroom.

* The system is being manipulated for financial gain. Some assessors admit to deliberately producing incorrect EPCs to help property owners access government grants or influence property values. Research found that 12 out of 20 interviewed assessors reported witnessing deliberate data misrepresentation.

* Banks are offering preferential mortgage rates for properties with better EPC ratings, while Ed Miliband wants all rental homes to meet adequate efficiency ratings by 2030. This effectively forces landlords to either pay for costly upgrades or sell their properties.

* Major lenders including Nationwide and NatWest have committed to making 50% of their mortgage customers’ homes energy efficient by 2030, despite the known flaws in the rating system.

* Reform party leader Nigel Farage has called the certificates “not fit for purpose” and pledged to scrap them, arguing they are particularly unsuitable for older British properties and may lead to higher energy bills.

* The government acknowledges the need for improvement and is consulting on plans to upgrade the system, while the Property Energy Professionals Association defends it, stating that the “overwhelming majority” of assessors meet industry standards.