The energy cost of a home is decided before you move in

Everything here earned its place by changing an outcome. Nothing about home running costs is included to round the number up.

Fabric sets the floor

How much energy a home needs to stay warm is determined mainly by insulation, glazing, air-tightness and the efficiency of the heating system. An occupant can change thermostat settings and habits, which matters, but cannot change how quickly heat escapes. Two identical households in different buildings can face very different bills for the same comfort level.

This makes the building an ongoing financial commitment that is fixed at the point of purchase or tenancy.

Performance ratings are a starting point

Many countries require an energy performance assessment when a property is sold or let, giving a rating and estimated costs. These are modelled estimates using standard assumptions, so they indicate relative performance better than they predict your actual bill. They also list recommended improvements with indicative costs, which is useful even when the headline rating is not.

The arithmetic is straightforward: methodologies differ between countries, so ratings are not comparable across borders.

Ask for actual consumption

Previous occupants' annual energy consumption in kilowatt hours is far more informative than a modelled rating. Sellers and landlords may provide it on request, and in some markets it must be disclosed.

Practically, consumption figures need adjusting for how the previous occupants lived, but they are real data rather than a model. A large gap between the modelled estimate and actual use is itself worth understanding.

Retrofit economics vary by measure

Loft insulation and draught-proofing are typically cheap with short payback periods; solid wall insulation and heating system replacement are expensive with long ones. Payback depends on energy prices, which move, and on subsidy schemes, which change and differ by country. Grants and low-interest finance exist in many jurisdictions and are frequently under-claimed.

The measure with the best return is usually the cheapest one you have not already done, not the most technically impressive.

Heating system choice is a long commitment

Replacing a heating system is a decision that determines running costs for a decade or more and is expensive to reverse. The relative running cost of different systems depends on the local price ratio between electricity and other fuels, which varies widely by country and over time. Some systems require better insulation to work efficiently, so the order of works matters.

In numbers, manufacturer efficiency figures are laboratory conditions, and real-world performance depends heavily on installation and on the building.

The right answer depends on your tax situation, which this cannot see.

Renters have less control and still pay

Tenants generally cannot make structural improvements and often pay the bills, which is a mismatch of incentives sometimes called the split incentive problem. Several jurisdictions have introduced minimum energy standards for rented property, with varying scope and enforcement. Checking the rating and asking for previous consumption before signing is the main lever a tenant has.

Cheap measures a tenant can install and remove — draught excluders, heavy curtains, radiator reflectors — are modest but real.

Everything above, in order of what to do first

1. Fabric sets the floor. How much energy a home needs to stay warm is determined mainly by insulation, glazing, air-tightness and the efficiency of the heating system.
2. Performance ratings are a starting point. Many countries require an energy performance assessment when a property is sold or let, giving a rating and estimated costs.
3. Ask for actual consumption. Previous occupants' annual energy consumption in kilowatt hours is far more informative than a modelled rating.
4. Retrofit economics vary by measure. Loft insulation and draught-proofing are typically cheap with short payback periods; solid wall insulation and heating system replacement are expensive with long ones.
5. Heating system choice is a long commitment. Replacing a heating system is a decision that determines running costs for a decade or more and is expensive to reverse.
6. Renters have less control and still pay. Tenants generally cannot make structural improvements and often pay the bills, which is a mismatch of incentives sometimes called the split incentive problem.

The takeaway

Ask for the last year's actual consumption. The building decides most of the bill before you arrive.

The decision is rarely about picking the best option — it is about avoiding the expensive one.