Leading Think Tank calls for Stamp Duty to be linked to Energy Efficiency
A leading think tank has suggested to Government that stamp duty should be less for energy efficient homes than leaky inefficient ones.
The Policy Exchange which is close to Government states that this change would likely see 270,000 households a year improve their energy efficiency.
The report states “Policies which link property values more closely to energy performance could kick-start an energy efficiency revolution in this country. Improving home energy efficiency can save households money, as well as substantially reducing their carbon emissions.”
The report criticises the current Government for cutting back energy efficiency programmes, which are widely agreed as the cheapest way to cut energy bills and meet carbon targets. The UK still has amongst the least efficient housing stock in Europe and the highest rates of fuel poverty as a recent news article from Elmhurst have also highlighted.
The report says the Government aim to improve 1m homes in this Parliamentary term; this is far fewer than the 4.5m in the last Parliament. It has also effectively parked the Green Deal programme. “This leaves a major policy gap”.
They give an example of how this would work in practice: a house worth £220,000 (the average UK price) would see a £500 reduction in stamp duty if it was energy efficient; but an inefficient house would see it rise from £1,900 to £2,470. This would effectively make the Policy fiscally neutral.
The report goes on to say that a stamp duty rebate could be offered subject to energy efficient measures being installed in the first 12 months from purchase e.g. loft, cavity insulation or a new boiler.
The report also notes that the lowest cost homes would not be affected as stamp duty is now not paid on properties up to £125,000. It also suggests that the Policy could be phased in over time.
The policy would be cost neutral to the HMRC and the Government can nudge people to making energy efficient improvements to their properties making them warmer and also adding potential a premium to the property, and a by product is that their energy bills would be lower.
The report also suggests that affordability calculations should be expanded to include how much properties would cost to heat, so that lenders could offer energy efficiency mortgages. Something about which Elmhurst have written about previously.
Elmhurst is advocates for a major shift in political thinking. These ideas have been muted before, but the time has come, for Government to fill the policy gap, making the UK population start to think about energy efficiency in their homes in a very different way. Getting energy efficiency imbedded into the housing market and house prices is essential to encourage home buyers to purchase more energy efficient properties. We all know this is a very good idea; we just need to see some action from the current Government.
For the full report click here: http://www.policyexchange.org.uk/publications/item/efficient-energy-policy?category_id=24
Stuart Fairlie – Head of Technical, Elmhurst Energy