Do private rental tenants pay for energy efficiency?: The dynamics of green premiums and brown discounts

Figures & data

Table 1. Property variables and descriptions.

Variable	Description	Type
Housing attributes
Rental price	Monthly rent price when ‘Let agreed’	C
In(Price)	Log of monthly rent price	C
Size	Floor area in m^2	C
Property Type	Type of property (1 if terrace; 0 otherwise)	B
Property Age	Year the property is built (in decades) (1 if 1900–1910; 0 otherwise)	B
Bedrooms	Number of bedrooms (1 if Beds1; 0 otherwise)	B
Reception rooms	Number of reception rooms (1 if Receps1; 0 otherwise)	B
Grade	Condition of the property (1 if Grade B; 0 otherwise)	B
Furnished	Whether the property is furnished (1 if part furnished; 0 otherwise)	B
Floor	Floor property is located on [Apartments only] (1 if 1^st Floor; 0 otherwise)	B
EPC rating	Assessed energy efficiency rating in bands (A-G) (1 if B; 0 otherwise)	B
EPC score	Assessed energy efficiency score (0–100)	C
Neighbourhood and location variables
Postcode	The postcode where the property is located to represent a granular submarket area (e.g. 1 if BT13; 0 otherwise or 1 if BT06; 0 otherwise)^1	B
Rural	If the property is located within a settlement development limit (1 if rural; 0 if urban)^2.	B
Settlement Band	Settlement bands where the property is located^3.	B
Multiple Deprivation	Decile of Multiple deprivation where a property is located (1 if Decile1; 0 otherwise	B

C = continuous; B = binary. ¹The Postcode unit used is at the two-digit level. There are 80 postcodes areas. ² Settlement Development Limits are a statistical classification and delineation of settlements in Northern Ireland defined by the Department for the Economy’s Planning Service. ³ Settlements are grouped with other settlements of similar characteristics. There are 8 Bands (A-H) based on Census population only.

Table 2. Descriptive statistics.

Variables	Minimum	Maximum	Mean	Std. Dev
Rental Price	250	3,600	802.13	330.459
In(Price)	4.61	8.19	6.62	0.33824
Size (m^2)	14.80	510.00	93.31	40.389
Bedrooms	1	6	2.53	1.017
Reception rooms	1	4	1.19	0.455
EPC Score	16	93	61.73	15.065
Classification type	Private built	89.9%	Public built	11.9%
Settlement type	Rural	12.5%	Urban	87.5%
Furnish type	Furnished	60.1%	Unfurnished	23.0%
	Part furnished	11.8%	Lux Furnished	5.1%
EPC Band	Band A	0.1%	Band B	8.1%
	Band C	30.7%	Band D	32.4%
	Band E	18.1%	Band F	7.7%
	Band G	3.0%

Figure 1. Rental market EPC rating price premium and discount effects.

Table 3. OLS EPC rating and score regression models.

	Model 1 (Rating)	Model 2 (Score)	Model 3 (Rating Int)	Model 4 (Score Int)	Model 5 (Apt)	Model 6 (Det)	Model 7 (Semi)	Model 8 (Terr)	Model 9 (Apt)	Model 10 (Det)	Model 11 (Semi)	Model 12 (Terr)
(Constant)	6.69453***	6.2639***	6.6845***	6.5654***	6.7461***	7.1152***	6.8508***	6.4866***	6.6875***	6.8025***	6.7243***	6.3656***
EPC B	0.08216**		0.08241**		0.1010**	0.0519	0.0735**	0.0240*
EPC C	0.02420***		0.01783***		Holdout	0.0310*	Holdout	0.0237**
EPC D	Holdout		Holdout		−0.031**	Holdout	0.0124	Holdout
EPC E	−0.03695***		−0.04040***		−0.035**	−0.01581*	−0.0300**	−0.0404***
EPC F	−0.05319***		−0.05616***		−0.135***	−0.02047*	−0.0257**	−0.0594***
EPC G	−0.02999		−0.03779*		−0.065	−0.03432	−0.1310	−0.0123
EPC Score		0.00191***		0.001851***					0.0029***	0.0001	0.0021**	0.0019***
Size (m^2)	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Type dummies	Yes	Yes	NA	NA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Age dummies	Yes	Yes	NA	NA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Type*Age dummies			Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Bed dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Recep dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Grade dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Floor dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Furnished dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Set. Band dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Rural dummy	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
MDM dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
R^2	0.717	0.71613	0.726	0.724	0.785	0.878	0.853	0.788	0.780	0.878	0.854	0.787
Adj. R^2	0.695	0.69517	0.699	0.699	0.680	0.690	0.785	0.757	0.680	0.707	0.790	0.758
F	32.630***	33.584***	27.361***	27.973***	7.495***	4.662***	12.455***	25.597***	7.776***	5.138***	13.279***	26.433***
N	2,914	2,914	2,914	2,914	1,096	244	415	1,159	1,096	244	415	1,159

‘*’, ‘**’ and ‘***’ indicate statistical significance at the 10%, 5% and 1% level, respectively. Parsimonious model presented. Full model including time and space dummies and Std. errors, t-statistics and p-values available upon request. Huber Sandwich Standard Errors & Covariance. Sparsity method: Kernel (Epanechnikov) using residuals. Bandwidth method: Hall-Sheather.

Table 4. Quantile EPC rating regression results.

	Model 13 (tau = 0.1)	Model 14 (tau = 0.2)	Model 15 (tau = 0.3)	Model 16 (tau = 0.4)	Model 17 (tau = 0.5)	Model 18 (tau = 0.6)	Model 19 (tau = 0.7)	Model 20 (tau = 0.8)	Model 21 (tau = 0.9)
(Constant)	6.089481***	6.343022***	6.286529***	6.35886***	6.93294***	7.142382***	7.20565***	7.335191***	7.087429***
EPC B	0.131966***	0.0854**	0.073791**	0.075634	0.080532**	0.082056*	0.139769***	0.082846**	0.159521**
EPC C	0.031011**	0.03593***	0.023964**	0.024219*	0.030372**	0.037145***	0.055344***	0.057539***	0.055481**
EPC E	−0.04696**	−0.05411***	−0.034217**	−0.029115**	−0.031871**	−0.03105***	−0.03436***	−0.03163**	−0.02787**
EPC F	−0.06028**	−0.03656**	−0.038417**	−0.02004	−0.035541**	−0.03652**	−0.04922***	−0.06589***	−0.0576**
EPC G	−0.08951	−0.08482	−0.036584	0.017314	−0.009756	−0.01945	−0.06213**	−0.07295	−0.12084
Size (m^2)	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Type dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Age dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Bed dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Recep dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Grade dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Floor dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Furnished dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Set. Band dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Rural dummy	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
MDM dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
R^2 (Pseudo)^1	0.322232	0.343189	0.368387	0.400168	0.431511	0.45957	0.484259	0.507374	0.51715
Adj. R^2	0.303555	0.325089	0.350981	0.383638	0.415845	0.444678	0.470047	0.493799	0.503844
Quan. dep. var	6.309918	6.388561	6.437752	6.476972	6.55108	6.620073	6.745236	6.856462	7.130899
Sparsity	0.751393	0.451563	0.392087	0.364276	0.356455	0.3531	0.390747	0.503103	0.740636
N	2,914	2,914	2,914	2,914	2,914	2,914	2,914	2,914	2,914

Figure 2. EPC Rental market price premium and discount effects.

Figure 3. Rental market quantile EPC-ratings price premiums and discounts.

Table 5. Quantile EPC score regression results.

	Model 22	Model 23	Model 24	Model 25	Model 26	Model 27	Model 28	Model 29	Model 30
	(tau = 0.1)	(tau = 0.2)	(tau = 0.3)	(tau = 0.4)	(tau = 0.5)	(tau = 0.6)	(tau = 0.7)	(tau = 0.8)	(tau = 0.9)
(Constant)	5.977593***	5.526232***	5.807485***	6.217973***	6.099502***	6.230759***	6.239025***	6.583708***	7.303557***
EPC Score	0.002518***	0.002138***	0.001786**	0.001879**	0.001778***	0.001807**	0.001891***	0.001993***	0.00206***
Type dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Size	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Age dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Bed dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Recep dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Grade dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Floor dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Furnished dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Set. Band dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Rural dummy	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
MDM dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
R^2 (Pseudo)^1	0.402995	0.420526	0.445895	0.473427	0.501149	0.52256	0.543364	0.560415	0.56885
Adj. R^2	0.363499	0.382189	0.409237	0.43859	0.468146	0.490973	0.513154	0.531333	0.540326
Quan. dep. var	6.309918	6.388561	6.437752	6.476972	6.55108	6.620073	6.745236	6.856462	7.130899
Sparsity	0.473959	0.324275	0.281785	0.263062	0.261926	0.263455	0.294549	0.350458	0.494445
N	2,914	2,914	2,914	2,914	2,914	2,914	2,914	2,914	2,914

‘*’, ‘**’ and ‘***’ indicate statistical significance at the 10%, 5% and 1% level respectively. Parsimonious model presented. Full model including Std. errors, t-statistics and p-values, Location and time dummies available upon request. Huber SandwichStandard Errors & Covariance. Sparsity method: Kernel (Epanechnikov) using residuals. Bandwidth method: Hall-Sheather.

Figure 4. Rental market EPC score OLS and quantile percentage effects.