The UK Green Building Council (UKGBC) has published a new report showing how a stamp duty incentive could help transform the energy and carbon performance of UK homes.
A housing market catalyst to drive carbon emission reductions: Low energy adjustment to Stamp Duty Land Tax demonstrates how a modest adjustment to Stamp Duty Land Tax could catalyse and drive the market to deliver both energy-efficiency improvements and low-carbon heat and power, while also being revenue neutral to HM Treasury.
Grants could then be focused on early and ambitious adopters, it says, supporting lower-income households, accelerating scale-up and driving down costs, with financial products used to help those who are asset-rich but cash-limited.
The UKGBC says a big shift is needed to change behaviour, improve energy efficiency, and switch to low-carbon heat; but that there is currently a market failure, with householders lacking motivation to undertake improvements at the rate needed and the cost of fuel bills rarely being factored into the price of a home.
The UKGBC said: “Though by no means a ‘silver bullet’, we firmly believe that a stamp duty incentive would drive a value differential in favour of more energy-efficient homes and embed energy efficiency into the decision-making process of homebuyers.
“Without it, we won’t be on track to decarbonise our housing stock or meet our climate and energy targets.”
Jenny Holland, the UKGBC’s Public Affairs and Policy specialist, said: “The UK’s homes are some of the oldest and least energy efficient in Europe – and they must be decarbonised if we’re to meet our net-zero target.
“However, currently householders aren’t incentivised to act – in part because energy efficiency isn’t properly rewarded in the homebuying market.
“That’s why we need a new stamp duty incentive, which will make energy efficient homes cheaper to buy and poorer-performing ones less attractive to purchasers.
“Properly designed, the incentive can be made revenue-neutral to the Treasury and would be very easy to administer.
“Decarbonising our housing stock is important not just for tackling climate change, but because it makes our homes cheaper to run and healthier to live in.
“A stamp duty incentive would build a thriving retrofit market, supporting green jobs, boosting household spending and bringing down fuel bills.”
She added: “Crucially, it would embed energy efficiency into the decision-making process of homebuyers and drive a value differential in the property market as a whole.
“The government should show international leadership and introduce a stamp duty incentive ahead of COP 26.”
Accompanying the report is an illustrative SDLT Energy Adjustment Calculator, with over 60 worked examples showing how the incentive would work in practice.
Image: imageportal/Shutterstock
Read next: Sustainability Showcase | South Yorkshire Housing Association
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