The market

Consumers will pay a premium for organic food, re-usable carrier bags and environmentally friendly cleaning products. But is the adjective “green” a blessing or a curse when it comes to selling a new home? This is a question that the housebuilding industry is becoming increasingly concerned about in the countdown to 2016 when all new homes have to be zero carbon.

Research released this month predicts house prices will rise by a long-term average of 4.6% a year. But rising land prices and increasing costs from Building Regulations and other such measures will push up build cost inflation by 5.5% a year.

The cost of going zero carbon is expected to add £9,000 to the build cost of a home, according to figures produced by DEFRA and BRE. But that figure contrasts with research by Cyril Sweett, English Partnerships and the Housing Corporation, which put the cost of reaching level 5 of the Code for Sustainable Homes, one level short of zero carbon, at £26,00-36,000 per home.

To date, housebuilders have not been able to pass the cost of greening a new home on to the homebuyer. The map above shows five new housing schemes being developed to Eco-Homes Excellent standard, the top green performance level prior to the arrival of the Code for Sustainable Homes. None is achieving a premium over equivalent non-green new homes in the area.

Savills’ report says few people are prepared to pay more for eco features in a new home. The consultant says the value of eco-friendly features in new homes is not going to be realisable by developers through higher prices.

In Gordon Brown’s last Budget as chancellor, he declared that new zero-carbon homes costing up to £500,000 would be zero-rated for stamp duty from this October until 2012. This could allow developers to add a premium to prices to off-set additional build costs, but there are doubts as to whether the premium would cover the cost of building zero carbon.

Savills concludes that housebuilders’ best hope is to apply green features and design quality together to enhance the value of homes. It worked for the carrier bag, so perhaps it could work for homes.