Energy labels when buying a home: understand consumption, costs and improvements

The label is not the same as your future heating bill. Your bill also depends on energy prices, the weather, the number of occupants, the room temperature and how much of the home you heat.

That is why you need to look at the energy label's calculation, the seller's actual consumption and the home's specific installations.

In brief

• The energy label shows the building's energy quality on a scale from A2020 to G.^[1]
• The rating is based on a calculated, standardised energy requirement, not just on the previous owner's bills.
• A2020, A2015 and A2010 are energy classes. The numbers are not the year the report was made.
• The report typically contains suggested energy improvements together with calculated investments and savings.
• The calculations are not quotes from tradespeople or guarantees of your future bill.
• An energy label is, as a rule, valid for 10 years unless the building is significantly altered.^[2]
• When sold, single-family houses of 60 m² or more, among others, must as a rule have a valid energy label.^[3]
• The energy label is not a condition report (tilstandsrapport) and does not generally assess damp, damage or legality.

What is an energy label?

The energy label is, in effect, the building's energy specification sheet.

It consists of:

1. A rating on the scale A2020 to G
2. An energy labelling report with information and suggested improvements

The purpose is to show the building's energy quality and the options for reducing energy consumption.^[1]

The label is prepared by a certified energy labelling company under the rules of the energy labelling scheme. The Danish Energy Agency (Energistyrelsen) supervises the scheme.^[4]

How to read the scale from A2020 to G

The rating should be read in the context of the type of home, its age, size and form of heating.

A house from 1930 and a newly built home have different constructions and improvement options. A lower rating therefore does not automatically mean the home is in poor physical condition.

What is the rating based on?

The energy consultant records information on, among other things:

• External walls
• Roof and loft
• Floors and basement
• Windows and doors
• Heating system
• Domestic hot water
• Ventilation
• Renewable energy
• The building's size and use

The information is used to calculate the building's energy requirement under standardised conditions.

This makes the comparison less dependent on whether the previous owner kept the home at 19 or 23 degrees, lived alone or had a large family.

Calculated consumption and actual consumption

The two figures answer different questions.

The Danish Energy Agency describes the energy label as based on calculated consumption, so that the building's energy quality can be assessed regardless of its users.^[1]

SparEnergi states that the report can also show the previous owner's actual consumption for the most recent year, but that the figure is affected by factors such as the weather and the owner's habits.^[2]

When the figures differ a lot

Low actual consumption may be because the seller:

• Has kept a low room temperature
• Has only heated part of the home
• Has lived alone
• Has been away a lot
• Has used a supplementary heat source

Conversely, high actual consumption may be due to a high temperature, many occupants or a particularly cold year.

The difference is therefore a question to ask, not automatically an error in the report.

What does the energy labelling report contain?

The report's structure can vary with building type and report version, but it typically contains:

• The energy label
• Calculated energy requirement
• Stated actual consumption, if available
• Description of constructions and installations
• Suggested energy improvements
• Calculated investment
• Calculated annual saving
• Information about the energy consultant
• Period of validity

The report is worth more than the letter alone. Two buildings with the same rating can have different heat sources, improvement options and costs.

Cost-effective improvements and suggestions for renovation

The energy label can distinguish between different types of improvement.

Improvements calculated as profitable

These are suggestions where the calculated saving bears a certain relation to the investment and lifespan according to the scheme's method.

This does not mean you will necessarily get your money back at exactly the time the report suggests. Energy prices, financing and actual use can change the result.

Improvements when renovating

Some measures are not profitable as standalone projects but can make sense when part of the building needs renovating anyway.

For example, extra insulation may be more relevant when the roof or facade is being opened up anyway. Scaffolding, materials and work processes are then shared between maintenance and energy improvement.

The energy label's prices are not quotes

A calculated investment is an estimate made using the energy labelling scheme's method.

The actual price can change because of:

• Choice of materials
• Access conditions
• Hidden constructions
• Knock-on work
• Tradespeople's prices
• Requirements from the authorities
• The need for repairs before the improvement

Quotes you obtain from tradespeople may therefore be both higher and lower than the report's figures.

The same applies to the saving. It is calculated, not guaranteed.

Example: how the heating cost affects the budget

Two homes both cost 3.000.000 kr. In the example, the financing and all other costs are the same.

The figures are illustrative and not linked to specific energy labels.

If the rest of the finances are the same, Home B leaves 1.000 kr. less each month. Over five years, the simple difference amounts to 60.000 kr., if prices and consumption are unchanged.

In reality, energy prices, weather and consumption change. The example only shows why running costs belong in the comparison.

Example: an energy improvement

The report shows a hypothetical suggestion:

The simple calculation is:

80.000 kr. ÷ 6.000 kr. = approximately 13,3 years

The calculation does not automatically take into account:

• Financing costs
• Maintenance
• Changes in energy prices
• Improved comfort
• The value of the existing part of the building
• Whether the project is carried out together with other renovation

The simple payback period is therefore one figure for comparison, not the whole decision.

Several suggestions cannot always be added together

If the report shows three savings, you cannot necessarily add them up directly.

For example, retrofitting insulation can reduce the heating requirement. If the heating system is then replaced, the saving from the new system is calculated on a different energy requirement.

The order can therefore change the sizing, the investment and the saving.

The report's combined scenarios are more relevant than a home-made sum of all the individual suggestions.

Comparing two homes

When you compare homes, you can gather several pieces of information:

Do not compare only the letter. A home with a lower rating may have had a new heat source installed after the report, while a home with a higher rating may use expensive energy or face a large maintenance job.

What it means for the bank's budget

Heating is a fixed housing cost and affects your disposable income (rådighedsbeløb).

The bank's calculation may be based on:

• The consumption information in the sales listing (salgsopstilling)
• The energy label
• Actual bills
• The bank's own budget assumptions
• Expected changes after the purchase

A lower heating cost does not automatically give you a specific extra loan amount. The bank assesses your finances as a whole.

Read more about disposable income and budgeting before buying a home.

Energy labels for houses and owner-occupied flats

House

A single-family house of 60 m² or more must as a rule have a valid energy label when sold. The seller must make sure the buyer receives the report.^[3]

The report concerns the specific building and can contain suggestions for that particular house.

Owner-occupied flat

For an owner-occupied flat (ejerlejlighed), the energy label normally covers the whole building, not just the individual flat.

This means the rating describes the property's overall energy quality. The position of your flat can still affect consumption. A corner flat or a top-floor flat may have a different heating requirement from a flat in the middle of the building.

Improvements to the roof, facade and shared heating system normally require decisions by the owners' association (ejerforening).

So also look at:

• The owners' association's maintenance plan
• Minutes of meetings
• Planned energy projects
• The method for allocating heating costs
• The flat's own consumption information

How long is the energy label valid?

An energy label is, as a rule, valid for 10 years.^[2]

If the building is significantly altered, the existing label may lose its validity or no longer give a fair picture. SparEnergi mentions, for example, replacing the heat source as a change that can affect energy consumption.

This means you should both check the expiry date and ask:

• Has the heat source been changed since the report?
• Has extra insulation been added?
• Have the windows been replaced?
• Has the home been converted or extended?
• Does the report's description match the home today?

A report can be valid on the date and still describe an older version of the building if changes have not been included.

When is an energy label required?

The Danish Energy Agency states that energy labelling is mandatory when, among other things, buildings over 60 m² are sold or let. Single-family houses of 60 m² or more must have a valid label when sold.^[3]

There are exemptions depending on building type and use. The rules therefore need to be assessed case by case if the label is missing.

The energy label must also be shown in commercial sales adverts when the property is covered by the advertising requirement.^[5]

What does the energy label not show?

The energy label is not a technical building condition report.

In general, it does not tell you:

• Whether the roof is watertight
• Whether there is mould
• Whether a crack is serious
• Whether the bathroom was built lawfully
• Whether the electrical installations are safe
• Whether the drainage works
• Whether a construction is damaged
• Whether the home feels warm and comfortable to you

The energy consultant may record constructions and assumptions, but the label's purpose is energy.

Also read the guides on the condition report and the building surveyor.

How to read the report step by step

Step 1: Check the address and validity

Make sure the report covers the right building, and check the expiry date.

Step 2: Look for changes since the report

Compare the heat source, windows, extensions and insulation with the home today.

Step 3: Read the rating in context

Look at the type of home, year of construction, size and form of heating. Avoid using the letter as your only assessment.

Step 4: Compare calculated and actual consumption

Note any differences and possible explanations. Do not use the seller's low consumption as a guarantee of your own.

Step 5: Go through the suggested improvements

Distinguish between cost-effective improvements and suggestions that are relevant when renovating.

Step 6: Look at the assumptions

Are the constructions documented, measured or estimated? The report may describe where the information comes from.

Step 7: Add the heating cost to your budget

Use a realistic amount that takes account of your household, form of heating and current prices.

Checklist when buying a home

• Is there an energy label for the right building?
• Is it still valid?
• Has the building changed since the labelling?
• What is the calculated energy requirement?
• What was the seller's actual consumption?
• Which energy price is used in the report?
• What heat source does the home have today?
• Which suggestions are described as profitable?
• Which suggestions only make sense when renovating?
• Are there specific quotes from tradespeople?
• Are the improvements included in your renovation budget?
• Has the bank been given a realistic amount for the heating cost?
• For an owner-occupied flat: who decides on and pays for shared improvements?

Common misunderstandings

A2020 means the report is from 2020

No. A2020 is an energy class on the scale.

Energy label G means the house is in poor physical condition

Not necessarily. The label is about energy, not the condition of the whole building.

The energy label shows my future heating bill

Not precisely. It is based on standardised assumptions. Your bill also depends on prices, weather and behaviour.

The seller's bill is more accurate than the energy label

It is more specific to the seller's household, but not necessarily to yours. The two figures are used for different purposes.

All the energy improvements in the report should be carried out

Not automatically. The suggestions have different economics and may be linked to upcoming maintenance.

The savings can be added together

Not necessarily. Measures can affect each other.

A valid label is always up to date

Not if the building has been significantly altered since the report.

A low energy label automatically gives a specific price reduction

No. The purchase price is agreed between buyer and seller based on the home as a whole and the market.

In short

The energy label makes the building's energy quality easier to compare.

Use the rating as a starting point, but read the report. Compare the calculated energy requirement with the seller's actual consumption, current energy prices and the way you will use the home.

See the suggested improvements as a first basis for your budget. The calculated prices and savings need to be checked properly before they become a concrete renovation project.

See how the heating bill fits with the loan, property tax and maintenance when you work out what the home costs per month.

Also read the guide on renovating when you buy a home.

BoligKlar gives you a second pair of eyes and an overview. The specific technical energy assessment and project calculation must be based on the home itself and current quotes.

Frequently asked questions