Call for stamp duty refund to reward green homes

Homeowners of properties with poor EPCs (Energy Performance Certificates) could be left behind if new proposed stamp duty reductions rewarding green homes are introduced.

Britain’s banks have told the government to consider giving people who make eco-friendly home improvements a stamp duty discount.

Homeowners will have to pay up to £300bn in upgrade costs to meet the government’s latest green standards, according to analysis by UK Finance, the banking trade body.

The cost of upgrading a home has increased significantly as households rush to meet so-called “net zero” targets or risk paying higher mortgage rates in the future.

Banks warned this would create a group of “climate prisoners”, as properties on the market in need of expensive eco upgrades become less attractive and prospective buyers are punished with higher borrowing costs.

David Postings, of UK Finance, warns that if the funding and physical implementation of this change are not thought through, there is a real “risk” that customers will be excluded from “ready access to the property market as a new cohort of climate prisoners”.

Lenders have called on the Government to incentivise upgrades by refunding stamp duty to buyers who pay for green upgrades within two years of their initial purchase.

This, they argue, would increase demand for energy efficient houses and encourage homeowners to retrofit their homes, UK Finance said.

Buyers could save thousands. The Office for National Statistics said the average asking price was £296,000 in August, meaning the stamp duty refund would be worth £2,300.

All properties are required to have an “Energy Performance Certificate”, graded from A to G depending on their green credentials. Almost 17m properties in the UK currently have a rating below C, which is considered poor.

Postings commented: “We need to act thoughtfully to ensure that we do not make this worse.”

Upgrading 17 million homes with low EPC ratings by 2035 will require the retrofitting of 1.2m homes per year, or 3,500 per day, according to UK Finance. Just 200,000 homes received these upgrades in 2021.

Stamp duty rebates should only be implemented after 2025, the report suggested, when there will be enough workers to carry out these upgrades.

It also called for an overhaul of the EPC system, which was first introduced in 2007. It said that the existing standards did not take into account emerging heating technologies, such as heat pumps.

UK Finance also found that many homes still did not have an EPC rating and that upgrades to home energy efficiency did not always translate to an improved rating.

 

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