Where and how we live plays an understandably crucial role in our national drive for net zero living. Last year the National Housing Federation released a report that calculated for the first time that England’s 25 million homes – which produce 58.5 million tonnes of CO2 every year – are emitting the equivalent of the average annual use of 28 million cars. There are 27 million cars in use in England, emitting 56 million tonnes of CO2 annually. Emissions from our homes are so high thanks to a combination of gas central heating and poor insulation that the average household in England is currently producing more CO2 every year just by living in their home than they are by driving.

Work is already underway to understand what must be done to address this. In November 2020, the UK Government launched its consultation ‘Improving home energy performance through lenders’.  Lenders, according to the government, have a role in building a market for energy performance improvements. Government is currently considering feedback and will publish their response in due course, but the consultation suggested that lenders will need to report publicly on the average EPC rating of their portfolio and targeting an improvement to a portfolio average of EPC Band C by 2030, in line with Government ambition for as many homes as possible to be EPC Band C by 2035.

I have previously written that the transition to a greener economy will require all organisations to establish data points that underpin how we measure progress. This is fundamental to an effective and safer transition to a net zero economy.

Data, unsurprisingly, is incredibly important in understanding the size of the emissions problem and the necessary corrective action homeowners may need to undertake to address the short-comings of their properties. Mortgage lenders are already engaging with us on this subject as they start to assess their portfolio’s average EPC Band.

While the EPC is far from perfect, it is now the recognised starting point for understanding what can be done and how we measure it. The validity period of the EPC is too long because a lot can change in a property over 10 years. That timeframe needs to be shortened to reflect a property’s reality more accurately. Reassuringly, in the Government’s progress report on the ‘Improving EPCs Action Plan’, it has undertaken to review this as part of the upcoming consultation on Energy Performance of Buildings Regulations.

Of course there remain other ways of incentivising the right homeowner behaviours for government – through tax breaks or penalties for example. But measuring how effective they are will still come back to establishing comprehensive and accurate datapoints -such as the EPC.

In the end the EPC has three important duties. Firstly, they should provide a trusted, accurate and reliable measure of a building’s energy performance; secondly, they should encourage consumers to reduce energy use in buildings; thirdly, they should support consumers and third parties with the right data to make informed decisions. Confidence in the data will be key and we are working hard to ensure it is comprehensively available, accurate, complete and timely.

We know that an energy efficient property over time will have an increased value and it may in due course increase the amount of borrowing available. Understanding the opportunities of EPCs in lending starts with the data and understanding more broadly how data like this will shape value going forward is crucial.