Are new builds more energy efficient than older properties?

The concept of energy efficiency in housing has become increasingly important in the modern world, where environmental concerns and energy costs are at the forefront of many homeowners' minds. This brings us to a pivotal question: Are new build properties inherently more energy efficient than their older counterparts? Yes, they are.

Key takeaways:

  • New builds are designed with energy efficiency as a priority, incorporating modern insulation materials and techniques which significantly reduce heat loss.

  • They are often fitted with energy-efficient appliances and systems as standard, including double glazing, LED lighting, and high-efficiency boilers.

  • Contemporary homes typically adhere to stricter building regulations that mandate higher standards of energy efficiency compared to past regulations.

  • New builds often feature design elements that take advantage of natural light and heat, reducing the need for artificial lighting and heating.

  • They are likely to be fitted with smart technology, allowing homeowners to monitor and control their energy usage more effectively.

Historical perspective on housing and energy efficiency

Traditionally, older properties were not constructed with energy efficiency as a primary concern. Insulation, if present, was often minimal, and windows were single-glazed, leading to significant heat loss.

As environmental awareness grew and energy prices soared, the need for more energy-efficient homes became apparent. Over the years, building regulations have evolved, placing greater emphasis on energy conservation.

Latest energy rules and regulations for UK developers

The UK government has introduced a series of stringent regulations to ensure that new homes are more energy-efficient. These are laid out in the Building Regulations Part L (Conservation of fuel and power), which were most recently updated in 2021. Key aspects of these regulations include:

  • Fabric Energy Efficiency Standard (FEES): FEES sets an energy efficiency benchmark for the building envelope (walls, roof, and floor). It ensures that new homes are well-insulated and airtight to limit heat loss.

  • Target Emission Rate (TER) and Dwelling Emission Rate (DER): The TER is a calculated amount of CO2 that a new house is allowed to emit based on its size, shape, and type. The DER is the actual emission from the house once constructed. For the house to comply, the DER must not exceed the TER.

  • On-site renewable energy: There is a strong emphasis on using on-site renewable energy sources, like solar PV and heat pumps, to meet the energy needs of the home.

  • Future Homes Standard: Set to be introduced in 2025, this standard will require new homes to be future-proofed with low-carbon heating and world-leading levels of energy efficiency.

Compliance with these regulations is mandatory and is validated at different stages of construction by Building Control Bodies (BCBs), such as local authorities or privately approved inspectors.

Why energy-efficient homes = stronger savings

For homeowners, the energy efficiency of a property is not just a matter of environmental concern but also a financial one. Efficient homes translate to lower utility bills. While the initial cost of a new build might be higher, the long-term savings in energy bills can be substantial. In some regions, government incentives or tax breaks are available for energy-efficient homes, making them even more attractive to buyers.

A study by the Home Builders Federation found that buyers of a new build house will save on average around £2,600 a year in energy bills. However, this doesn't imply that older properties can't be energy efficient. With proper renovations, such as installing new insulation or upgrading heating systems, older homes can significantly improve their energy performance.

Significance of ERC Rating for New Builds

The Energy Rating Certificate (ERC) rating is especially relevant in the context of new builds, where energy efficiency is a significant selling point. First and foremost, it validates the energy efficiency claims associated with a property. For potential homeowners and landlords, the ERC rating serves as a reliable measure of a property's energy performance, allowing them to make a comparative assessment against other properties.

Moreover, an impressive ERC rating can enhance the market value of a new build property. As consumers are becoming increasingly conscious about their carbon footprint and energy expenses, properties with higher energy efficiency are often preferred, contributing to their resale value.

The ERC rating also has implications on the operational costs associated with a property. A higher ERC rating, indicative of superior energy efficiency, can translate into lower utility bills, offering long-term financial benefits for occupants. This is particularly crucial for new build properties, where the initial investment may be higher.

Finally, the ERC rating provides homeowners with an actionable roadmap to improve their property's energy performance. While new build properties generally incorporate advanced energy-saving features, there's always scope for enhancements, which can be identified through the recommendations provided within the ERC. Thus, the ERC rating is not just an evaluative tool but also a guide for continuous improvement in the realm of energy efficiency.

A word from our mortgage adviser - Jon Bone

Properties are now being constructed by firms who are rewarded for building homes that are energy efficient, this will often mean when you move in your energy bills will be lower than an older property.

Lenders are also rewarding these energy-efficient homes by offering rates exclusively to customers purchasing properties that are in the best EPC bands. So by purchasing an energy-efficient home, you can find yourself saving money each month on your mortgage and your utilities.

In summary, while both new builds and older properties have their unique charms and challenges, when it comes to energy efficiency, new builds generally have the upper hand. They are constructed with modern standards that prioritise energy conservation, resulting in lower utility costs and a smaller environmental footprint.

However, it's crucial to remember that energy efficiency in older homes can be significantly improved with the right upgrades, making them a viable option for those who prefer their character and charm. The key is to weigh the costs and benefits, considering both short-term expenses and long-term savings.

Important info & marketing claims

You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

*The savings figure of £506 is based on Better.co.uk remortgage customers in December 2023. Read more on our marketing claims page.

We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.

Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.

Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.

As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.

For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.