How fitting a heat pump could LOWER your home’s green rating 

Heat pumps will be installed in millions of homes as part of the Government’s green goal to turn the nation carbon neutral by 2050. 

Energy-­efficiency ratings could soon also hit house prices and mortgage rates, as ministers put pressure on lenders to help make the housing stock more eco friendly. 

But, as Money Mail today reveals, installing a heat pump can in fact reduce your home’s energy efficiency score. This is because, as experts warn, the ratings system is archaic and no longer fit for purpose. 

It’s also down to taxes levied on electricity, which means running a heat pump can cost as much as 30pc more than a gas boiler. Mortgage experts worry that the march towards a carbon-free Britain could leave millions of homeowners trapped in poorly insulated properties they cannot sell or afford to upgrade. 

Many are also still reeling from previous green home schemes that have flopped — with millions unable to take advantage and rogue traders chasing grant cash. It comes as Money Mail revealed earlier this year that some of these green home upgrades could take around 50 years to pay back through fuel savings. So, will the Government’s latest eco-drive end up being just another green farce? 

NOT WORTH THE ENERGY 

Under the new green homes proposals, mortgage lenders will be asked to have an average energy-efficiency rating of C across homes on their books by 2030. Homes are rated with an energy performance certificate (EPC) that gives a grade of between A for the most efficient, and G for the very worst. A home must be scored on construction and whenever it is sold or rented. 

Around 19million homes in Britain are rated below C. The certificates are valid for ten years, and some listed buildings do not require one. In Scotland, sellers are required to get a Home Report, which includes an EPC known as an energy report. An EPC rates your home on how much it costs to heat — giving an efficiency score out of 100. But, surprisingly, the rating has nothing to do with how bad heating your home is for the environment. 

EPC assessor Kevin Bolton says: ‘They are wrong because they are all based on cost. What they should be about is carbon rating.’ Paula Higgins, of the HomeOwners Alliance, also describes the EPC as a ‘blunt instrument’. An EPC costs between £60 and £100 and will involve an assessor visiting your home to carry out a survey. 

Meanwhile, analysis for Money Mail by EPC assessor accreditation firm Elmhurst Energy shows that replacing a condensing gas boiler with a heat pump in a detached home would actually decrease the property’s EPC score by three points from 63 to 60. This is because electricity is more expensive than gas per kilowatt. An EPC also advises a homeowner on what could be done to increase the energy efficiency of their home. 

This typically includes wall insulation, attic insulation, installation of solar panels and energy-efficient lighting. However, the current system does not recommend installing a heat pump. Chris Wilde, managing director of heat pump installer Yorkshire Energy Systems, says: ‘It’s ridiculous because using gas is producing much higher levels of CO2. The EPC is not fit for purpose. They were revised before renewables were a big thing and they have never caught up with it. If the Government wants to have this big rollout of heat pumps, they have got to change EPCs. We are hoping to see a big change.’ 

PRICE ISN’T RIGHT WITH OUR BILLS 

Heat pumps are more expensive to run than conventional gas boilers because electricity costs more per unit of power. But this is because electricity bills are hit with climate taxes of around 23pc, while gas carries just 2pc. Martyn Reed, managing director of Elmhurst Energy, says: ‘The Government wants people to start using electric but at the moment they have this price anomaly where there is a tax on electricity. It’s out of kilter.’ 

The Government says that it wants to shift levies off the price of electricity to make it cheaper for households over the next decade, which experts say might fix the issue with EPCs and heat pumps. An Octopus Energy spokesman adds: ‘It’s now cheaper to generate power from renewable sources than from fossil fuels, but because of this tax imbalance, the cost of electricity is kept artificially high. 

‘In fact, if those carbon taxes were shifted from electricity to gas, heat pumps would cost half as much to run as a gas boiler. ‘This process may not be instantaneous, but by the time most people are getting a heat pump, we hope it will be no more expensive to run than a gas boiler.’ 

COWBOYS COULD START CASHING IN

The Government last week said that it wanted to ban the installation of gas boilers by 2035, and would offer 90,000 households a grant of £5,000 to put in a heat pump from April next year. Heat pumps convert energy from the air or ground, to provide central heating and hot water. They can cost between £8,000 and £15,000 to set up. The Government wants to be installing 600,000 heat pumps a year by 2028. But there are concerns that there aren’t enough trained installers or quality-control checks in place to ensure that homeowners do not pay over the odds for an inadequate system. 

Mr Wilde says that without proper checks in place, the rollout could be compromised by shoddy work. He says: ‘There’s always been plenty of cowboys around and when you have Government incentives you will have cowboys spring up that know nothing about the technology. It’s a nightmare.’ 

He also explains that there are only 750 heat pump engineers in the country, compared to 19,000 qualified gas boiler installers. And he says that even if all gas engineers were trained to fit heat pumps, they’d likely only manage 60,000 a year. Mr Wilde says: ‘If you get your average one-man band, you are going to get a lot of bad installations. It needs some sort of quality control to stop the cowboys coming in.’ 

Mr Wilde says a heat pump can do anything a boiler can — but only if it is installed properly. He points out that poorly insulated homes will need a larger heat pump and bigger radiators, but they can nevertheless still be kept perfectly warm. 

PROPERTY PRISONERS 

MPs last week warned that the Government’s green mortgage plans risked trapping millions of owners in unsellable homes — as well as making it harder for first-time buyers to get on the property ladder. The proposals would mean that lenders would have to disclose the energy performance of properties on their books, and set voluntary targets to improve the insulation of their houses. But experts fear that those who live in older, period properties could be left unable to remortgage or sell if they cannot afford to make the changes. 

Matthew Fleming-Duffy, director at Cherry Mortgage & Finance Ltd, says: ‘England has some of the oldest housing stock in the world, with 21pc of dwellings built before 1919 and 16pc built between 1919 and 1945, and older properties tend to be colder and often more challenging (and expensive) to improve.’ Analysis from property website Rightmove earlier this year found 1.7million homes would be unable to ever reach a C rating. Lewis Shaw, founder of Shaw Financial Services, says: ‘It could easily risk a two-tier property market. The most significant impact would almost certainly affect firsttime buyers and younger people disproportionately.’ 

The HomeOwners Alliance’s Ms Higgins also fears the proposals could push up the price of newbuild properties. A study of 200,000 homes by Rightmove found that owners who upgraded their home from an F to C saw the value rise 16pc, while moving from an E to C added 8pc, and from a D to C added an extra 4pc. Lenders Nationwide and NatWest have both already pledged to ensure that at least half their mortgage books are EPC C ratings or higher by 2030. 

Nationwide has put £1billion aside to help people retrofit their homes. Claire Tracey, Nationwide’s chief strategy and sustainability officer, says it is important that ‘everyone can benefit and nobody is left behind’. She adds: ‘We will continue to provide mortgages for all EPC tiers although we will seek clarity from government on any future plans to introduce an exemptions policy to ensure we are responsibly lending on properties with lower EPCs.’ 

The mortgage industry is also concerned that many homes will not have an EPC or it will be long out of date. This is because the certificates last ten years, and some 50pc of the nation’s homes are mortgage-free. 

STILL DRAGGING THEIR FEET 

Despite the Government’s ambitions, poorly insulated homes are still being added to the housing stock every day. A Business, Energy and Industrial Strategy Committee report in 2019 criticised the Government for continuing to allow energy-inefficient houses to be built. MPs also warned that homes built to old EPC standards could see their ratings fall when their owners go to sell. 

Labour’s shadow housing secretary Lucy Powell says: ‘It is essential that consumers and industry have confidence in the way that homes are assessed for their energy performance. ‘After scrapping Labour’s zero carbon homes policy, which would have meant the 800,000 homes built since 2016 were zero carbon, they have allowed loopholes to open in the EPC standard, and are dragging their feet on updating the measure.’ 

A Government spokesman says: ‘Our plans will support homeowners to reduce their energy bills by improving their home energy performance, and will increase consumer choice rather than restrict it. We are already improving EPCs so they are as accurate and effective as possible. ‘To ensure electric heat pumps will be no more expensive to run than gas boilers, we want to reduce the price of electricity over the next decade by shifting levies away from electricity.’