Government Plans Introduction of Energy Performance Certificates

The Government today announced plans for the introduction of Energy Performance Certificates as part of the phased roll-out of Home Information Packs to help consumers cut costs and waste when buying a home and help the environment too.

In the light of the plans for testing and concerns about the readiness of industry, the Government announced new proposals to phase the introduction of HIPs, prioritising the delivery of energy efficiency information with further testing later this year on the other aspects of HIPs.

This means that HIPs will be introduced in June next year with searches and energy performance information, enabling buyers and sellers to get A-G ratings on their homes similar to fridge ratings as well as a list of practical measures to cut their fuel bills and carbon emissions at the same time.

The Energy Savings Trust estimates that by following the proposals in the Energy Performance Certificate, the average homeowner will save £300 a year on fuel bills. Government also believes that the information could be used to support the growth of green mortgages and other incentives.

However on the basis of detailed consultations with industry and the latest market and testing information, the government has decided to phase the roll out of other aspects of Home Information Packs, introducing the rest of Home Condition Reports on a market-led basis in the first instance, in order to ensure a smooth implementation with clear benefits for consumers.

Minister for Housing and Planning, Yvette Cooper said:

“HIPs can deliver great benefits for consumers and the environment. But it is important that they are implemented in a sensible way, based on proper testing. That is why we will begin with the most important element – energy efficiency ratings for homes. This will mean practical information for homeowners on how to cut their fuel bills and carbon emissions. People should be backing HIPs to help everyone respond to the global challenge of climate change.”

"We look forward to working with the lending industry, HIP providers and those training to be home inspectors as we develop the next steps."

The dry run aims to ensure that HIPs deliver the maximum benefits to consumers by looking at costs, the savings from avoiding waste and duplication, consumer attitudes to the Packs, failed transactions and transaction times, and people's willingness to sell with HIPs in place. It will begin with further consumer research in the summer as well as analysis of over 14,000 HIPs produced so far, in order to inform area based trials later in the year which will be independently monitored.

Ministers are determined to avoid the risks to consumers and to the implementation of Energy Performance Certificates from a “big bang” introduction in June next year. In particular, further testing is needed on the costs and impacts of Home Condition Reports and the government does not want to see early roll out of Energy Performance Certificates jeopardised by late amendments or delays to the rest of the scheme.

The latest information casts doubts on the readiness of the industry to be able to pass on the benefits to consumers from next June. There are concerns about the number of home inspectors who will be in place in time. In addition evidence from the Council of Mortgage Lenders shows that many lenders will not be in a position to make maximum use of Automated Valuation Models which will support the use of the Home Condition Report. The Government is keen to avoid risks to consumers from industry delays and potential late changes to the implementation timetable next year.

Therefore, the Government will begin by promoting the take up of HCRs on a market-led basis - including examining the case for pump priming and other incentives. Mandatory introduction of Home Condition Reports remains on the table, however the Government wants to encourage market led take up first, in order to allow a more flexible roll-out that responds to consumer demand and the results of further testing. The Government will urgently review with key stakeholders what support is needed to ensure that there are sufficient home inspectors in place, and that consumers are fully protected.

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