Sustainability in a Residence: A Buyers Beacon

Abstract

Sustainability is increasingly important for homebuyers due to environmental awareness, legislation, and financial benefits like reduced energy costs and higher mortgage potential for energy-efficient properties. However, evaluating a home's sustainability is challenging as properties may be misrepresented by the seller. Further on, the bounded rationality of homebuyers can also affect property assessment. This thesis explores the legal obligations applicable to homebuyers in assessing sustainability before purchase, explores current market practices for assessing sustainability, and explores professional property evaluation. Thereby, this thesis aims to use insights retrieved from professional investors to guide homebuyers in making informed decisions on sustainability when buying a residence.

A mixed-methods approach, including a legal review, interviews with professional investors, and a survey among homeowners, was used. The legal review indicates that buyers must conduct thorough property investigations. Energy labels provide information but do not guarantee specific features and should be compared with the true state of the property and seller information. Annulment of a purchase based solely on an energy label is difficult without false disclosures.

Interviews reveal that unsustainable properties are losing value, partly due to legislation limiting the lease of such assets to tenants. Professional investors use various methods to assess sustainability, such as comparing assets with reference objects, seeking external advisory, assessing development potential, examining energy consumption data, evaluating climate risks, understanding energy labels, considering certifications like BREEAM, assessing embodied carbon, and evaluating asset installations and insulation.

The survey shows that sustainability is increasingly important to homeowners, primarily to reduce energy costs. Respondents are willing to pay more for higher energy labels but often fail to thoroughly investigate property sustainability, highlighting this study's relevance. Greenwashing was not a significant issue among respondents.

This study supports previous research on the importance of sustainability and the need for thorough property investigations. Limitations include the difficulty of generalizing legal rulings, the small survey sample, and potential interviewer bias. Evolving legislation, fluctuating energy prices, and the volatile housing market may quickly render results outdated.

Homebuyers are advised to consider the energy label, check its assessment date, and conduct additional research before purchasing. Homebuyers are advised to request previous energy consumption data and consider risks related to heat, flooding, and foundation damage. External advice is recommended, especially for homes built before the 2012 Building Decree. The state of installations can be assessed with further external certification. While solar panels can improve an energy label, proper insulation is more crucial. Limiting energy demand should be prioritized before focusing on green energy generation.