For every five buildings that exist today, four will still be standing in 2050. That makes energy efficient refurbishment a top priority for Europe, and an important opportunity for owners and tenants.Despite the potential savings, energy efficiency is rarely the focus of residential renovations in Europe. Adding weight to the issue is an increasing body of evidence that suggests that even when renovations are completed with a view to increasing efficiency, the investments made are routinely suboptimal. The result is a long-term lock-in effect and a great deal of unrealised potential for energy demand reduction.
The REVALUE project, therefore, sought to address the relationship between energy efficiency and values in the residential sector and specifically the rented sector, which in Europe is dominated by social housing providers. Partnering with RICS, the lead valuation professional body the aim of the project was to “to lead the development of appraisal norms and standards that recognise Energy Efficiency Value in social and private residential real estate.” It has done this through a series of interviews and roundtables, in-depth cases studies of selected housing providers, the development of a prototype data modelling tool and a major regression study of social housing stock in the Netherlands and the UK.
The main findings from the project relate to valuation norms and standards; the matter of data, including EPCs; and the motivations and barriers to investment policy motivation and barriers. Among a large number of findings in REVALUE project, some key findings have emerged:
• Valuation methods are inherently flexible and can accommodate the impact of sustainability so whilst there is a need to further develop guidance to valuers, no new techniques are needed.
• Energy efficiency labels do not currently play a key role in determining values in the residential rented sector but some energy characteristics, notably visual ones such as high-quality glazing, are factored in.
• Energy Performance Certificates (EPCs) have raised awareness but could be more effective if consistency and currency were improved.
• Although EPCs do not exert a key role in determining value, there is often limited energy data availability and the data that is available does not readily integrate with valuations.
• Despite this, to encourage investment in greater energy efficiency, valuers need to work with energy experts or/and develop greater knowledge around renewable energy sources and how they change the technology used in buildings.
• The motivation to upgrade is based on a range of factors: for social housing providers; making capital gains through ‘value added’ is not the key driver.
All these have implications for the valuation professional body, for building owners and many for policymakers.
The findings, reflections and lessons learned have culminated in revised guidance to valuers specifically addressing the changing European landscape for residential values.
