Influencing Behaviours - ISM House purchasing behaviour – energy efficiency

1. Influencing Behaviours - ISM House purchasing behaviour – energy efficiency Output from Workshop at SG on 14/1/2014

2. Understanding this Report • Scotland’s Sustainable Housing Strategy (SHS) was published in June 2013. It sets out a route-map for meeting our fuel poverty and climate change targets. The SHS identifies the need for a Financial Market Transformation so that “there is market premium on … low carbon homes … because these are valued by lenders, consumers and surveyors”. • A collaborative ISM Workshop was held on 14 January 2014 to explore the role energy efficiency plays in home buyer decisions. • Participants were asked to describe current decision making around house buying and energy efficiency and what current policies and practices (government, organisational, official, unofficial, etc.) might influence it. Participants were then asked to suggest changes that could raise the profile of energy efficiency in decision making. • This report captures that discussion. It is structured around the Individual, Social and Material contexts. • The observations and suggestions are those of the participants and do not constitute the views of the Scottish Government. • This report will be considered by the Scottish Government as it develops an Action Plan to help realise the Financial Market Transformation that has been identified.

3. Individual context • What do people look for? EE is a second tier issue. First tier – Location(school catchment) No. of rooms, suit family, etc • Do people believe or associate EPC ratings with lower running costs? Association between EPC and comfort/warmer house? • EE akin to council tax– not that relevant when buying a house (but people understand council tax – do they understand EPC?) • EST research shows people are in theory prepared to pay more for an EE house, but in practice don’t see this; sellers don’t see or promote this as a sales / valuation tool • People invest in home improvements (kitchen, b’roomupgrades) because associate with rising market values in 2000s. Does not apply to EE • ‘Value’ is not just financial value • Perceptions of costs and benefits – people don’t recognise running cost savings or ‘see them’ when they invest in EE themselves, so why pay more for ee house? • New builds – people expect EE and lower running/maintenance costs, but implicit not explicit • PV panels higher savings than EE retrofit? • EST research – people want warmth and cost savings. • No pleasure or excitement from EE measures compared to new kitchen (for many). (But some excited by ‘eco’ houses?) • People don’t like negotiating so unlikely to negotiate on price around age of boiler or EPC rating (a poorly understood topic) unless prompted. • Logical / practical ‘brain’ vs, emotional ‘brain’ when house buying – how to tap into the former • Buyers / sellers have no confidence to negotiate on ee – poorly promoted / understood • Estate agents and solicitors don’t have confidence / knowledge to use it as sales tool??? • Lack of trust / belief in EPC? • House purchasing – every 7 or so years - but EE not relevant or an established practices / cultures (see SOCIAL) –Negotiation on price based on structural issues; furniture etc. not EE • Know what – people don’t know or understand the cost savings associated with different measures, never mind links between EPC ratings and energy costs. (Issue of predicted vs actual savings varying by type of household and people within any given house). • EST research – people say they want info like EPC rating, but don’t see or pay attention to. Need to consider how best to present this?

4. Social context • No norms around EE and house buying • No negotiation around EE rating, e.g. EPC G rating, and price offered and agreed on (see habits) • Focus EE (as a sales tool / priority factor?) on those who have most to save in energy bills, e.g. retired/stay at home parents. • Type of house and location signals status. • Refurb – kitchen or b’room – can illustrate good taste. • EE invisible, not seen as good or bad taste • Location = a type of property • EE means: • Green • Confusing / useless info • Comfort? • Cost savings [but are these believed?] • EE doesn’t mean: • ‘Homes and Gardens’ • a desirable / good home • a negotiation tool • value for money • On ESPC website it means presence of measures, not EPC, more helpful? • Can meanings change to engage key institutions? • Surveyors – process of valuing a house, driven by previous market sales and ‘red book’, 3 comparable sales. • Surveyors – information paper on valuing EE published 18 months ago but not impacting - why? • setting price, solicitors – advise on negotiation on price, but are they aware of cost savings of different EE measures? Single measure - £200-£300 savings pa. not big enough to advice negotiation? £1k yes. (But old boilers – advising negotiation on those?) • For key institutions, EE is not (believed to be) a tool that can be used to set price, negotiate • Limited social discussions around having an EE home (relative to kitchens etc). Therefore, no sharing of experience, no creation of norms. • Options to share around solicitors estate agent professional networks (e.g. linked-in) • Are there any around EE? • Lessons from car industry and miles per gallon – need comparable currency / experience to lead.

5. Material context • Known technologies such as boilers vs novel technologies such as micro renewables. But people not sure about cost savings of either? • Contrast double glazing – desirable and normal – with other EE measures. Because double glazing is a visible social norm? • The EPC - Meant to make EE more important; • Does it just make it more confusing, meaningless and ignored? • Is the home report the best place and time for the EPC/EE? Regulations already require EPC rating to be displayed in advertse.g. should it sit alongside house price on search websites in a more prominent way (ESPC already includes)? For sale boards? • Multiple key moments – selection, assessment, negotiation? • EPC – cost savings not clear enough/too vague. Only presented over 3 years – short/long enough? Doesn’t look favourable. Also no mention of grants available. • Informal rules – don’t negotiate on boilers or EE measures, but do on curtains. Soft infrastructure – established house buying process

6. Priority ISM factors to influence for behaviour change • Skills – know what (Individual) • EE not understood sufficiently by all stakeholders • Meanings, Institutions, Opinion Leaders (Social) • Need to turn meaning of EE into something that can be used by surveyors, estate agents and solicitors (to their / their clients advantage) • EE not valued as a sales / bargaining tool • EE needs to be something that helps negotiation; pricing; descriptions; speed of selling • Objects, Rules and regulations, Time & Schedules (Material) • EPC not encouraging action on energy efficiency • Multiple key moments in house buying process

7. Existing Policy and Guidance Mapping (government and non-government) • House sale websites- on ESPC/GSPC but not upfront • Insights • Material • Measures –guidance, but limited and impact? • Social context lacking • Esp meanings • Institutions – key role – very patchy • Individual – lack info and knowledge (skills) to assess – and value - costs and benefits • Home Reports contain EPC rating and recommended measures • Surveyors red book and information paper on EE (but latter not had an impact. Why?) • New Consumer Regulations on house sales • Proposal – minimum energy efficiency standards • FCA – New affordability assessment for mortgages (Apr 2014) but energy costs low down list. • Solicitors and Estate Agents – no guidance and no marketing/advice on EE to buyers (occasional on new builds) .

8. Policy and Guidance Mapping PLUS IDEAS • House sale websites- GSPC, ESPC –move EE upfront and make searchable by EPC/running costs/measures • Home Reports –move up EPC rating to a more prominent part e.g. include in initial summary along with other key bits of information, link with running costs/savings; • Surveyors red book and guidance on EE (but latter not had an impact. Why?) • New Consumer Regulations on house sales • Proposal – minimum energy efficiency standards • Subsidise lower mortgage rate for EE houses for buyers • Lower LBTT (stamp duty) on EE houses • Lower council tax for EE houses • FCA – New affordability assessment for mortgages (Apr 2014) but energy costs low down list. • Solicitors and Estate Agents – no guidance and no marketing/advice on EE to buyers (occasional on new builds). Surveyors guidance not impacting. • EE social marketing for institutions – EE articles into trade press, seminars at trade conferences – running cost savings and evidence on what consumers want (EST research) .

9. Ideas to consider and take forward • Home reports and EPC – priming people and making EPC and its rating more salient to all stakeholders (test). Reframe EE. • Institutions – multiple key moments and roles - persuade and inform • Communication and social marketing (trade press, seminars, conferences) • Disseminating existing evidence and gathering new evidence (property websites – encourage trials, live or otherwise) • Find/create opinion leaders. 2020 group? • Big consumer attention grabbers – stamp duty cut, EE minimum standards? Social marketing. • Package of well designed and researched measures to reframe and prime EE homes as more valuable for buyers/sellers/institutions.