September 23, 2020 | Vishnu Nellithodiyil , Certified Energy Consultant, Dubai

Everybody wants an energy-efficient property. After all, an energy-efficient residential property is comfortable to live in, without large energy bills. These can be important factors for prospective residential property owners or tenants. A quick review of international research found energy-efficient residential properties typically fetch a higher price.

An energy performance rating is one way to show how “energy hungry” a residential property could be. In many countries, it is mandatory for the seller to obtain and disclose a residential property’s rating. For European Union countries, this has been the case for ten years.

But that’s not the case in most of UAE, however few has a regulated scheme to disclose the energy-efficiency rating of housing to prospective buyers.

Obviously, it isn’t just the energy rating of a house that affects its price. Location, size, age and other relevant features of a property influence the final price. Researchers use a statistical method, called hedonic regression, to estimate the effects of all these factors. A residential property energy rating was included as one of these factors.

The studies we reviewed were published between 2011 and 2019, covering 14 countries and ten energy performance rating schemes. Most of the studies (18) considered the European Union’s Energy Performance Certificate (EPC). Although there are differences in how each EU country defines and manages these certificates, they are broadly comparable, in that they use a standard A (high) to G (low) grade.

How would energy rating benefit ?

This system would obviously be good for people trying to sell (or wanting to buy) energy-efficient residential properties, but it’s also good for our society. It has been estimated almost half the residential properties that will be in use in 2050 have already been built. If we are to meaningfully reduce carbon emissions from our cities and built, a scheme that allows owners to capitalize on the energy efficiency of their residential property would change the economics of retrofitting existing residential properties. Owners would have a clear incentive to improve energy performance without the need for large government subsidies.

Unfortunately, there is no accredited method to measure energy-efficiency for the majority of existing Dubai residential properties. This means the only way for prospective owners or renters to make an informed decision about the likely comfort and future energy bills for a residential property is self-assessment or through a reputed energy auditor.

Other markets have already shown the path forward and some of the key steps by defining a nationally consistent rating checklists for existing residential properties. The checklists will enable you to obtain a star rating for your home, in the same way as a fridge or washing machine has a star rating residential property’s shell and a representation of the running cost of the fixed appliances in your home. It will guide you to make home improvements efficiently and cost effectively. It also enables you in providing specific information of property assets performance at different weather conditions, as well as recommendations on how to improve that performance.

These provide a framework for owners to voluntarily disclose the energy performance of their residential property at the point of sale or lease. Owners of higher-rating residential properties will be likely to introduce minimum standards of energy performance for rental properties. Also, once a property’s energy performance is rated, owners shall be obligated to improve the energy performance of any property they wish to offer for rent as demanded by the tenant.

Our quick global suggests residential property tenants typically value a more energy-efficient residential property. When presented with easily accessible information in the form of an energy performance rating, they are willing to pay more.

Hence, energy rating disclosure policies can help consumers make informed decisions that will result in lower energy bills and more comfortable residential properties. At the same time, by allowing sellers to capitalize on energy-efficiency improvements through a certified rating, government can support reducing carbon emissions from our existing building stock.

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