Energy Performance Certificates: More than just a colourful graph

23/Sep/2010
Guest Blogger

Many people believe that an Energy Performance Certificate (EPC) is simply a pair of multi-coloured graphs that provide some obscurely generated rating on the energy efficiency of the property in question.

Anecdotally, through my many dealings with estate and lettings agents, these so-called ‘professionals’ are not much wiser about the nature and content of an EPC than the consumers with whom they interact, and presumably, advise.

What is so frustrating for an energy assessor is that the EPC is much more than just a set of graphs. While the visual manifestation of the inspection and report lies in the A-G graph, the real guts is contained within the rest of that document, not least simple and inexpensive measures that can save money!

Estate agents are obliged by law to commission an EPC when a property is placed on the market for sale and to include the graphs within their marketing materials. Lettings agents are meant to ensure that an EPC is in place before a tenant enters into a tenancy agreement. In my experience, there is widespread non-compliance with these requirements and Domestic Energy Assessors are often asked to produce EPCs much later than legally required.  Sometimes, the law is flouted completely and no EPC is ever commissioned.

Where EPCs are produced, I am convinced that the full 5 or 6 page document hardly ever reaches the hands of would-be buyers and tenants – they are simply told that the EPC has been done or given a copy of the graphs.

As Domestic Energy Assessors (but perhaps not enough others) know, the EPC is, in reality, a brief report that details the type of construction and the key factors that affect both energy consumption and efficiency and the CO2 emission levels. In addition, it recommends possible improvements, categorised by cost and return on investment, and indicates what effect these would have on the energy and emission ratings.  Now surely, that has to be of interest to consumers.

Ratings are scored on a 0-100 scale which are highlighted within A-G tiers, where 100 points and A (92-100) are the highest ratings and tier, and 0 and G (0-20) are the lowest. The current average for a UK residential property in terms of energy efficiency is apparently 46 points, which equates to an E tiered rating (39-54). Even a brand new property built to the latest building regulation standards would only achieve a B rating (81-91). A score of 100 would mean that a property was cost-neutral in terms of annual energy use. I’m not sure how many windmills you would need in your garden to achieve this but you get the picture!

Michael Day, managing director of Integra Property ServicesI believe the current seemingly ‘tunnel vision’ focus on the graphs is unhelpful. Clearly a property scoring at the highest level of a tier will be significantly better than one scoring at the bottom and yet, unless someone looks deeper than the A-G ratings, they could both appear to be rated the same. I have been in offices where negotiators have quoted a property as being a D and then said no more. This could mean a rating of 55 or a rating of 68. If these were school exam results the Government would no doubt be ensuring that we knew that ratings of 68 represent a 23% improvement over a rating of 55. With EPCs at the moment they are both simply Ds!

I actually think there is a huge opportunity for the property industry to wake up and become better educated as to what an EPC is all about and that more enlightened agents and others will undoubtedly then find ways to better market themselves, add value and win more business as a result.

I applaud NES for assisting with this, with the introduction of the Domestic Energy Property Report, which embeds an EPC into a comprehensive document. The real key though is the flexibility it gives all professionals. Because the functionality is based on creating one document out of a series of separate PDF documents, the energy assessor or the estate agent can explore ways to add value to the EPC and thus their service. I know that NES has a library of fact sheets, but there is nothing to stop anyone using other documents or producing value added information of their own.

So I say it is time for the industry to wake up!  If agents take the time to become better educated about the EPC then I am sure they could use it to win more business.

This is a guest post written by Michael Day MBA FRICS FNAEA, Managing Director of Integra Property Services. Contact Integra by email or by telephoning 07717 295369.


The views expressed in this blog article are the personal views of the author and do not necessarily reflect the views or policies of National Energy Services.  When submitting a comment, please be aware of the guidelines provided in our website terms and conditions.

Comments

 

Quote from above "Estate agents are obliged by law to commission an EPC when a property is placed on the market for sale".
I'm so glad this is NOT true! If this were the case I would get no work at all as I rely on sellers commissioning their EPC directly from me (more quickly and for less than half the price they would pay if the Estate Agent commissioned it.)
This is my biggest gripe with this whole industry! Property agents are usually the first port of call for house sellers and landlords, and they will offer to commission the EPC. How many say 'or you could pick your own DEA from Yellow Pages'. Almost universally, property agents use a panel of DEAs to provide all their EPCs - and possibly an intermediate company that takes a cut as well! As most NHER members know, working for a panel pays peanuts. A DEA can be paid £30 (of which £6.15 goes to NHER) and the customer is then charged anything up to £100 + VAT (more in some parts of the country).
In any other industry, this would be scandalous, totally unacceptable - imagine a plumber only being paid a quarter of the cost of doing the job, the rest going to a company that 'commissions plumbers'!
Why does the customer need anyone to do the commissioning? Just look in Yellow pages for a local person in the same way you would if you were looking for any other professional service.

 

Anne

Thank you for your comments. Let me clarify further.

Estate Agents are legally obliged to ensure that an EPC has been commissioned before they market a residential property for sale.

You are quite right in that many sellers will commission directly and give the EPC to their agent, retaining greater flexibility in the process. It is however legally incumbant upon the agent (not the vendor) to ensure that this happens. Of course, agents have a vested interest in trying to control the distribution of EPC work and many see it as a vital additional income stream.

The fee question is, for most DEAs, a very thorny one, as it is for lawyers and indeed anyone who takes business via introducers or panel managers, all of whom take a cut out of the fee paid by the consumer.

However, we operate in a free market economy and, whilst DEAs and lawyers have largely ended up at the bottom of the "food chain" by having work introduced (mainly by estate agents who are the catalysts for the whole process and often at ridiculously low fee levels), it is a simple economic decision that dictate whether someone accepts that work or declines it. I don't take work from panels (too many people taking a cut)but do some work for agents and private individuals.

I could take some work in and pass it out to someone cheaper and take a cut but I'm not prepared to risk quality issues or incur management headaches - whcih is why the panel managers have their clientelle!

The other factors are that there are far too many DEAs chasing too few instructions and the Government has lengthened the validity lifetime of an EPC which will also reduce renewal/replacement volumes.

This all makes running a business more challenging but then that's why many of us get up in the morning!

 

Thanks for the reply Michael
I understand everyone involved needs to try and keep their business running and the estate agents and panels will always look at ways of reducing costs and making profits. Generally this seems to be achieved by a relationship between the Estate Agents and the Panel companies. It benefits both of them financially, but not the DEA and not the house seller.
In this industry – more than any other I can think of – the middle men take a disproportionate amount of the total income compared with the professionals actually doing the job.
I'm not suggesting this is anyone's fault. I think it is a legacy of the way in which EPCs were introduced, i.e. as part of the HIP. Pack providers were needed to coordinate all the documents required, package them and supply them to the seller or their agent. At the time, they were the specialists when nobody else was. There was a need for a new type of business to fulfil that role. But now, there is no real need for that 'packaging' role.
Estate agents continue to use panels because it allows both parties to make money. I don't know if the general public think that they are providing an additional service or adding value in some way, but they are not. The only service being offered is the production of an EPC, which could be done more cheaply by contacting a local DEA direct.

 

Anne

Agree although the major estate agency chains etc do also benefit from the control elements of working with one panel provider, one SLA, one monthly billing etc rather than hundreds of individual arrangements.

Over 80% of the estate and letting agencies in UK are firms of less than 15 offices and so still opportunities to win business direct and locally. Unfortunately there are a plenty of independent DEAs who are also cutting prices to uneconomic levels. They won't be around long but make it painful for everyone whilst they are in death throes!

Mike

 

My business still gets the majority of instructions via the internet. Sellers and landlords will save by going direct but they also need to be careful who they use. The EPC needs to be promoted as a valuable product, unfortunately fees being paid now make a mockery of its value to end users. "No one looks at them anyway" is the standard response from most estate agents.

 

I did an EPC for someone on my street last week. She told me yesterday that they had had one viewing and (in a very surprised voice) " they particularly wanted to see the EPC and were very interested in it!" The fact that this was a big surprise to her says it all really - it is quite unusual. Probably another DEA moving in down the road!

 

I suspect the biggest advance in EPC usefulness would be just to add up the estimated annual running costs and print "£1,157 per year", or whatever, over the EPC graphs.

Why not give consumers some info that matters to them, and means something to them?

 

Talking to a vendor the other day who quite ingeneously puts the EPC and her current utility bills out on show for prospective purchasers of her property. She highlights the energy cost savings on the documents and they go away thinking what a useful selling tool that is. Perhaps instead of just highligting the graphs in the agents details a bit more explanation could be added.

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