Does it pay to have a green house?
14/12/2007
As Kermit the Frog once sang, “It isn’t easy being green” – and, if you follow government advice and turn your home into an eco-haven, it isn’t cheap either.
To make suggested improvements to an average three-bed terraced house would cost a scary £23,547. If you need to borrow money to fund this, you’ll have to pay an extra £1810.68 a year on an interest-only 25-year mortgage at the current standard variable rate, for an annual pay-back of just £486 in utility bill savings, according to a costing by The Royal Institution of Chartered Surveyors (RICS). If you have a repayment mortgage, the additional repayments on your mortgage increase to £2,147.64 a year.
The RICS has priced the key elements of a sample Energy Performance Certificate – an important part of the government's new Home Information Packs. Its calculations include cavity wall, pipe and loft insulation; new condensing boiler; heating controls; double-glazing; solar water heating; and concrete floor installation.
The authorities believe that the resulting energy rating will have a noticeable effect on property prices, with well-rated homes selling for more and sellers having trouble shifting homes that fail to get a green seal of approval.
But the RICS research shows that homeowners would have a long wait to see a return on their investment – up to five years for cavity wall insulation and up to 208 years for solar heating. (See table below for details.)
The cost of a green house
| Cavity wall insulation |
£728 |
| Energy saving per year |
£145 |
| Payback period |
5 years |
| Loft insulation (top up to 250mm) |
£755 |
| Energy saving per year |
£60 |
| Payback period |
13 years |
| Hot water cylinder and pipe work insulation |
£761 |
| Energy saving per year |
£20 |
| Payback period |
38 years |
| Condensing boiler |
£2,000 |
| Energy saving per year |
£52 |
| Payback period |
38 years |
| Installation of full heating controls package |
£2,240 |
| Energy saving per year |
£65 |
| Payback period |
34 years |
| Double glazing |
£9,327 |
| Energy saving per year |
£75 |
| Payback period |
124 years |
| Solar water heater |
£5,000 |
| Energy saving per year |
£24 |
| Payback period |
208 years |
| Concrete floor |
£2,736 |
| Energy saving per year |
£45 |
| Payback period |
61 years |
Going into the red
This doesn't sound like good value – and there's worse news. The additional repayments on the mortgage could be enough to push many households into the red.
"Our evidence shows it takes only a very small change in people's circumstances to tip them from manageable credit commitments into serious debt," says Citizens Advice Bureau (CAB) spokesman Peter Tutton.
New figures show that debt enquiries to CABs across England and Wales have hit a record high, increasing by 20 per cent in the last year. The CAB estimates that almost a million homeowners have missed a mortgage payment over the past 12 months.
Every little helps
Of course, there are alternatives to a throughly green overhaul of your home. Simple steps such as turning fown the thermostat a few degrees, taking showers rather than baths and never leaving electrical equipment off stand-by can all help to save energy – and the plant.
With rocketing prices of conventional energy, it’s also worth looking for a better deal. LowerMyBills.co.uk allows you to check how much you could save on your energy bill every year – to compare energy prices click here.
Conduct a financial survey
Before you take on any major financial commitment, you should always survey your financial position – and the place to start is your credit report. This is the personal history of what you've borrowed and your repayment track record, so you can instantly see how much you owe and how well you're coping.
You could get a wake-up call or a pleasant surprise. If you still want to go ahead with some energy-efficient improvements, you should always consult a local estate agent to see how much value they will add to your property. You should also calculate the real cost over time – our table should help.
You can see your Experian credit report as often as you like with a free, 30-day trial of CreditExpert, the online credit monitoring and identity fraud protection service.
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