The Clean Growth Strategy released in October outlined the desire to have all ‘fuel poor’ homes upgraded to, at least, Energy Performance Certificate (EPC) Band C by 2030 and as many homes as possible to be EPC Band C by 2035.
Among the various plans and policies set out to encourage this energy efficiency improvement, the government has confirmed it is considering lowering stamp duty costs on sales of greener homes. If you’re unsure as to what efficiency band your home falls into, get in touch with an EPC provider or look for more information on the EPC Register.
As the largest contributor to carbon emissions within the UK are existing buildings, measures that encourage consumers and homeowners to reduce their own carbon footprint are certainly needed if a greener future is to be reached.
Currently, new regulations in the form of Minimum Energy Efficiency Standards are now being enforced from 1st April for homes being placed on the rental market; a sign that the government is finally offering a proactive approach in trying to reach their carbon emissions targets and tackle climate change.
With numerous government initiatives failing to persuade householders to bring about energy efficient behaviour in the past, this new proposition will need the right supporting discourse to convince householders of the benefits of improving their homes.
Referred to as ‘a tax on moving’, ministers have been urged to cut stamp duty after evidence has shown it is creating social problems by preventing families from moving, as well as impacting the economy – it was confirmed in August that HMRC stamp duty revenues reached record highs of £12.8 billion in the preceding 12 months.
Stamp duty is a tax that is paid when a person buys a home that costs more than £125,000 with rising tiered rates above this figure.
Consistently a subject of political debate, reform is often put forward to help encourage activity in the property market, not least for first-time buyers who have little faith in the current housing system.
As the Evening Standard points out, the average first-time buyer in the capital faces a tax bill of over £11,000, and while relieving them of this bill would benefit them, this has been tried before and has not in itself been transformative. Indeed, by increasing demand it could in fact push up prices.” And that is precisely one of the reasons behind considering these cuts.
With better energy efficiency, the government suggests properties will likely increase in value, offering an incentive for homeowners to take action, and creating an attractive prospect for potential buyers, who would benefit from the cuts.
If calls for stamp duty to be imposed on sellers, rather than buyers, were to be granted, this would, undoubtedly, encourage many to improve on their home’s energy efficiency. Energy minister Claire Perry said the government was looking at various approaches to incentivise improving energy efficiency in the home and, although a recent report called for fines for people who sell “cold, draughty homes”, she declined to suggest that this would be the case. “It’s more likely that a home where insulation has been put in would attract a higher value, because the running cost of that home over the lifetime of ownership would be lower.”
There are numerous ways that a house can improve its energy efficiency with some of the most simple and low-cost including adding insulation to attics, and swapping out regular light bulbs to energy saving bulbs, such as LEDs. Homeowners may also be inclined to turn to renewable sources of energy, such as installing solar PV panels to their roofs, all of which can result in the lowering of household bills, and creating a nicer living environment all year round.
New support for ‘green finance’ would be provided and homeowners will be glad to know that they would not be penalised through their mortgage by making any energy efficiency related improvements.
There is currently little detail on how the stamp duty cuts might look, with no specifics on if a home would need to be of a certain EPC rating to be eligible.
However, there’s little doubt that our current government is publicly keen to supply housing and getting more people into their own homes. Although nothing is yet set in concrete, there are positives to be had in that stamp duty is once again on the lips of minsters.