Does your property carry a 'pollution premium'?

New data released by environmental risk analysts, Future Climate Info, has revealed that prices paid for properties in polluted postcodes are sometimes higher than in clean postcodes - causing many homebuyers to pay for the 'privilege' of dirty air.

Related topics:  Property
Warren Lewis
30th April 2018
london smog

According to the findings, homebuyers spent a total of £24.9bn on properties in pollution hotspots across England and Wales last year, with one in twenty transactions (5%) taking place in polluted areas, according to analysis by FCI.

FCI’s research examines property and land data from HM Land Registry alongside environmental data from EarthSense Systems on average Nitrogen Dioxide (NO2) levels in 100m² areas, caused by vehicle emissions and other sources.

Of around 850,000 homes that changed hands in England and Wales during 2017, nearly 41,500 were in areas where average NO2 levels are likely to exceed annual legal limits – worsening in peak traffic and stagnant weather conditions. FCI’s findings highlight the extent to which residential transactions are bringing homebuyers into contact with poor quality air, and raise questions about how well-informed they are about the environments they choose to buy in.

The potential effects of excess NO2 can include long-term health concerns for people spending extended periods in these conditions, as well as the need for sensitised individuals (such as asthma sufferers) to take extra steps to manage their exposure and exercise accordingly. High concentrations of NO2 are often associated with the presence of other air pollutants.

Five counties or urban areas see buyers pay pollution premium

Postcodes with higher levels of NO2 often fall within central urban areas with higher concentrations of amenities and infrastructure, or otherwise near transport hubs. This can mean the prices paid for properties in polluted postcodes are sometimes higher than in clean postcodes – leaving buyers effectively paying a premium for a property or location that also exposes them to poorer quality air.

In other cases, homebuyers are paying a ‘clean-air’ premium for properties in less urban areas for the benefit of less congested or built-up surroundings.

Within Greater London, homebuyers in 2017 paid £731,409 on average for properties in polluted postcodes compared with £555,315 in clean postcodes: a 32% ‘pollution premium’.

However, outside the capital, the average price paid for homes in clean postcodes during 2017 was £254,350, compared with £244,318 within polluted postcodes: a 4% ‘clean air premium’.

FCI’s analysis shows that there were 24 counties or metropolitan boroughs in England and Wales where at least 100 transactions occurred in both clean and polluted postcodes during 2017. Comparing the average prices paid, 19 areas saw buyers pay a ‘clean air premium’ with the highest being 29% in Hertfordshire.

However, five areas saw buyers pay a ‘pollution premium’. Greater London was the highest (32%), with other affected areas being the City of Derby (12%), City of Nottingham (4%), Cambridgeshire (3%) and Greater Manchester (2%).

Geoff Offen, Managing Director of Future Climate Info, comments: “Over time, poor quality air can have a serious impact on our health and well-being, so it is important now more than ever to be aware of the risks. Property buyers have started to see it as an equally important issue as the other environmental and social factors we traditionally consider when buying a home.

Investing in bricks and mortar is one of the biggest decisions most people will make in their lives. In paying a premium to be nearer to urban centres, infrastructure or good transport links, some buyers – especially those in the capital – can effectively end up paying more to breathe some of the nation’s poorest quality air. In other cases, it is clean country air that comes at a premium price of up to 29% in Hertfordshire.

As air quality continues to become a headline issue and a public health concern, homebuyers and investors will seek out information about what they are buying into and tailor their lifestyles accordingly. For many, this concern will also extend to the workplace as well as the home environment as the public become savvier about the risks to their health.”

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