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Valuation of energy performance certificates in the rental market – Professionals vs. nonprofessionals

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  • Khazal, Aras
  • Sønstebø, Ole Jakob

Abstract

The implementation of Energy Performance Certificates (EPCs) is expected to reduce energy consumption and carbon emissions by providing actors with information that can be used to make better-informed decisions. This paper is the first to investigate EPCs in the Norwegian residential rental market. Applying the hedonic multilevel approach using information from some 440,000 rental contracts over the period of 2011–2018, we find that labeled dwellings have a premium compared with non-labeled dwellings, and that the premium is increasing with a higher EPC-label. We further define two classes of lessors – professional (real estate agents) and nonprofessionals (homeowners) – to study potential heterogeneity in EPC valuation and find that professionals assign higher rents compared with nonprofessionals. Dwellings with high energy efficiency are associated with a higher premium if rented out by a professional, a significant part of which stemming from higher EPC valuation. The results are robust to a number of heterogeneity analyses and after controlling for sample selection bias and unobserved locational heterogeneity. The findings of this paper signify the necessity to increase awareness and public dissemination regarding the EPC policy.

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  • Khazal, Aras & Sønstebø, Ole Jakob, 2020. "Valuation of energy performance certificates in the rental market – Professionals vs. nonprofessionals," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520305474
    DOI: 10.1016/j.enpol.2020.111830
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    1. Alejandro Hirmas & Jan B. Engelmann, 2024. "Learning the value of Eco-Labels: The role of information in sustainable decisions," Tinbergen Institute Discussion Papers 24-024/I, Tinbergen Institute.
    2. Matheus Koengkan & Nuno Silva & José Alberto Fuinhas, 2023. "Assessing Energy Performance Certificates for Buildings: A Fuzzy Set Qualitative Comparative Analysis (fsQCA) of Portuguese Municipalities," Energies, MDPI, vol. 16(7), pages 1-30, April.
    3. Leo Reutter, 2025. "Inefficient incentives for energy saving in tenancy law and policy options to remedy the landlord-tenant dilemma," European Journal of Law and Economics, Springer, vol. 59(1), pages 179-218, February.
    4. Zuhaib, Sheikh & Schmatzberger, Senta & Volt, Jonathan & Toth, Zsolt & Kranzl, Lukas & Eugenio Noronha Maia, Iná & Verheyen, Jan & Borragán, Guillermo & Monteiro, Cláudia Sousa & Mateus, Nuno & Fragos, 2022. "Next-generation energy performance certificates: End-user needs and expectations," Energy Policy, Elsevier, vol. 161(C).
    5. Maria-Francisca Cespedes-Lopez & Raul-Tomas Mora-Garcia, 2022. "Are Cave Houses a Sustainable Real Estate Alternative?," Land, MDPI, vol. 11(12), pages 1-17, December.
    6. Pagliaro, Francesca & Hugony, Francesca & Zanghirella, Fabio & Basili, Rossano & Misceo, Monica & Colasuonno, Luca & Del Fatto, Vincenzo, 2021. "Assessing building energy performance and energy policy impact through the combined analysis of EPC data – The Italian case study of SIAPE," Energy Policy, Elsevier, vol. 159(C).

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