Considering a makeover for your dwelling? Possessing a B energy efficiency rating (BER) or higher provides access to a plethora of increasing discounts. A respectable rating allows households to decrease energy bills, procure lower mortgage rates, enjoy home insurance discounts and anticipate a greater return if they choose to lease or sell their residence. Plus, a more cosily heated home is an additional benefit. As you determine the expenditure of a retrofit, here are several discounts and costs to contemplate.
Reduced expenses
The more robust your home’s BER, the less energy is required to warm it, resulting in reduced bills. Upgrading to attic and wall insulation, new doors, windows or a revamped heating system could result in significant expenditure – do your energy bills genuinely warrant these costs?
To contrast the running expenditure of your dwelling with a B2-rated house, which is the least Sustainable Energy Authority of Ireland (SEAI) recommends when modernising an older property, they offer a handy calculator.
Consider a scenario where a four-member family resides in a semi-detached property with a gas boiler for heating. The home has a D-rank and during winter, it’s heated from 6 am to 8 am and then from 6 pm to 10 pm at a thermostat setting of 20 degrees.
Their neighbours, sharing a wall, had some modifications done, including the installation of a heat pump and demand-controlled ventilation. Their identically sized house now has a B2 rating – are their energy savings truly significant?
Even with the properties being identical in size, the neighbours consume roughly 60% less energy, and their bills are approximately 17% lower, as per SEAI projections. They are utilising renewable energy, which costs less.
The annual energy bill estimate for the D-ranked property is €2,100, while it’s €1,750 for the B2-rated house. That equates to an annual saving of €350. Over time, these savings will help offset the cost of the improvements.
There’s also increased comfort to consider. Households with higher energy ratings expend less money for a more cosy experience. When the heating is switched off, a B2-rated house remains warmer for an extended period.
Consider the case of an individual occupying a 1970s bungalow powered by oil. This home uses 56 per cent more energy compared to a B-rated house, resulting in the occupant shelling out an extra 30 per cent, or €650, on energy expenses. However, those living in new A-rated dwellings on the outskirts of town are reaping the benefits of significantly lower energy costs. In a comparison between a B2-rated and an A-rated home, the latter registered a further 24 per cent reduction in annual energy expenditure, as estimated by construction company Glenveagh.
Adding value to your home
Investing in proper insulation and a modern heating system can cause a considerable rise in your property’s worth. Your home’s value, according to the SEAI, could increase by 1 per cent with each step you take on the building energy rating (BER) scale.
For instance, should a house upgrade its BER from grade G to B2, its value will experience a boost of 10 per cent. Consequently, a sizeable amount of the cost invested in energy improvements will be recouped if the property is put up for sale. Suppose your home has a D2 rating. If updated to the SEAI’s recommended B2 rating, the house will see an elevation of six grades on the BER scale, which corresponds to a value increment of 6 per cent.
The first two months of 2023 witnessed more than a 35 per cent increase in searches according to energy rating on myhome.ie, compared to the last two months of 2022, as revealed by the website’s research data. Increased energy costs and sustainability issues have led three-quarters of property searchers to take the property’s BER into significant consideration during decision-making.
Imagine two identical Delgany Wood, Co Wicklow dwellings marketed recently. One retains its original D1 energy rating from its 2002 construction, while the other has been advanced four scales up to a B3 rating. Though the layout and appearance are identical, the house with a higher energy rating boasted more energy-efficient windows, doors, and insulation, which justified a €10,000 higher market price. The justification comes from the potential for a reduced mortgage rate, lower heating costs, and the warm satisfaction and cost savings enjoyed by the seller prior to the sale.
Attracting a mortgage markdown
Leading banks are keen on capitalising on the green movement, by offering reduced mortgage rates to those whose homes have high energy efficiency ratings. These so-called ‘green mortgage rates’ are typically accessible if the building’s energy rating lies within an A1 to B3 category.
Consider a mortgage holder with a property energy rating of D1 and a house value of €600,000. The individual is left with €200,000 and 20 years’ worth of their mortgage, currently repaying €1,172 a month at a fixed 3.78% interest rate with Avant for four years.
Assuming they aspire to stay in the same property over the medium term, they opt to spend on retrofitting measures, thereby improving their home to a B3 energy rating. This elevation in rating opens up the possibility of availing green mortgage rates from lenders like Haven, AIB, and PTSB, designed specifically for homes with energy ratings between A1 and B3.
By transitioning to a Green four-year fixed rate with Haven, for instance, the monthly repayments decrease by €18, or an annual saving of €216, along with a contribution of €3,000 towards legal fees. While not a substantial saving, enhancing the Building Energy Rating (BER) provides flexibility in switching alternatives.
For individuals relocating, the terms are somewhat more favourable. Those securing a €300,000 loan spread over 25 years for purchasing a home with a B2 energy rating can access AIB’s Green Five Year Fix rate of 3.6% with monthly repayments of €1,493. However, if they were to purchase a D1 rated home, the most competitive rate available would be 3.78% with Avant, which is €25 more per month.
Improved energy rating can also benefit your home insurance premium. A high energy rating implies good insulation which mitigates risks such as pipe bursts due to freezing weather. Furthermore, safety measures like upgraded heating, plumbing and electrics can potentially enhance home security. For instance, a house with an A or B BER can achieve a 5% saving on home insurance premiums with Zurich. Therefore, it pays to check with your insurer for a potential discount on policy renewal following an improvement in your BER rating.
So then, is it within your budget to invest in it?
Surveys conducted by the SEAI point to expense as a prime obstacle to retrofitting. Sa review of 223 semi-detached and mid-terrace homes that were retrofitted last year via SEAI’s comprehensive One Stop Shop service showed that the median retrofitting cost was €59,300. This cost was reduced to €37,800 after the application of €22,000 grants. These modifications took home energy efficiency from an average E1 rating to an A2 rating.
Although reaching an A-rating might be financially daunting for some, it is not always necessary. Selecting only specific, high-yield, cost-effective improvements can propel many residences to a B-rating, which could potentially make them significantly warmer, reduce household bills and even lead to discount offers.
Last year, homeowners who used SEAI’s Better Energy Homes scheme, through which they contracted an SEAI-approved supplier to conduct a set of targeted, high-impact improvements, racked up median home improvements amounting to €7,300, but only paid about €3,100 after the application of grants, as stated in the SEAI’s National Retrofit Plan report for 2023.
Case in point, the median price for installing roof insulation was €2,125, however an SEAI grant absorbed €1,400 of the cost. Seeing as heat naturally rises and almost 30 per cent of home heat can be lost through the roof, investing in roof insulations offers instant returns, making it one of the most cost-effective, high-impact improvements out there.
The median cost for cavity wall insulation was €2,000, reduced to €300 by a grant of €1,700. Considering internal wall insulation, this had a median cost of €8,000, with a grant covering €3,500 of the total cost.
Achieving a minimum B-rating can activate substantial discounts. The initial step involves identifying the necessary improvements suitable for your home and factoring in the cost with available grants. A BER assessor is necessary to conduct an analysis to SEAI’s One Stop Shop service standard. According to Conor Walsh of SEAI certified provider, Encon, it is important to gather several quotes from various providers. Remember that there is a SEAI grant of €350 is available for the assessment.
This analysis will provide a thorough technical review and a plan for necessary enhancements to optimise the efficiency of your house along with the total projected cost. To obtain the subsidy for the review, you are not mandated to conduct the work. From the engagement report, you will be able to select which aspects provide optimal value for money.
Considering a loan to improve energy efficiency? Even more accessible for homeowners is a new funding option for energy improvements, arranged by the Strategic Banking Corporation of Ireland. This loan scheme is characterised by affordability and it begins from an interest of 3 per cent. Homeowners can now take a loan ranging from €5,000 to €75,000 over a maximum of ten years with PTSB, AIB and Bank of Ireland to make their homes not just comfortable but also cost-effective. Opting for a €30,000 loan over 10 years at a variable rate of 3 per cent from the Bank of Ireland will result in a monthly instalment of €289.
It is obligatory that any upgrades should qualify for an SEAI subsidy, with a projected improvement in energy performance by a minimum of 20 per cent. The initial plan of action is to approach an SEAI recognised supplier for an energy assessment of your home.