Ahead of COP26, the Government has launched its Heat and Building Strategy. This will aim to encourage homeowners to switch to low-carbon alternatives before 2035 as part of its plan to cut Britain’s reliance on fossil fuel heating.

Following this announcement we undertook research to reveal the disparity between how homes are heated in rural and urban locations, and across different house price bands.

By analysing average values of homes transacted between 2018 and 2020 we found that homes with newer, cleaner, methods of energy demand a much higher price tag. Across England and Wales, buyers purchasing a home with a heat pump fitted are paying on average 68 per cent more for the offer of cleaner energy.

We found this premium to be most acute in the North East, with homes on average 98 per cent more expensive. It's least profound in London, with homes on average 38 per cent more. This stark surcharge comes as heat pumps are predicted to become the main source of low carbon heating for new homes, as the Government sets out ambitions of installing 600,000 heat pumps a year by 2028.

There’s also significant disparities between homes in rural and urban locations, more than five out of six (84 per cent) homes in urban areas rely on mains gas supply, compared with just a third (34 per cent) in rural areas. In rural areas, almost half (43 per cent) of homes are fuelled by oil. 

Homes in the North East are most reliant on mains gas (87 per cent). Meanwhile London (24 per cent) and the South West (18 per cent) have the highest number of homes using ‘cleaner’ methods, including electricity, community housing schemes and heat pumps.

It’s no great surprise that the vast majority of homes still use mains gas heating and that more environmentally friendly heating methods such as heat pumps and community heating systems are most prevalent in higher value areas. However, it is clear that in many areas housing values would not necessarily support investment in new forms of heating.

According to Nationwide Building Society, Britain’s housing directly contributes towards 15 per cent of the UK’s emissions and will need to decarbonise two homes every minute to meet climate obligations. The rural building link with oil, and city dependence on gas, brings to the fore the chasm between ambition and reality of replacing mains gas with heat pumps and the need for a more sustainable solution.

We have an enormous challenge ahead set by the zero carbon agenda. While government subsidy will undoubtedly go some way in supporting people reducing their homes’ environmental footprint, more resources and investment is needed to significantly cut our reliance on fossil fuel heating.

Savills recognises real estate is responsible for 40 per cent of carbon emissions and, to coincide with COP26, it is launching its latest research examining how the sector is adapting to meet climate change challenges. Savills is committed to achieving net zero carbon in its operation by 2030. Through Savills Earth it brings together the expertise of more than 100 specialists to support and advise clients on their sustainability, energy and carbon strategies. To find out more visit Savills Earth 

Further information

Contact Lawrence Bowles

Savills Residential Research