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Should homes that aren’t energy efficient incur higher Stamp Duty?

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
27/02/2024

One think tank has proposed that the energy performance of a property could be linked to the level of Stamp Duty buyers need to pay

Would you be happy to pay more in Stamp Duty for a property was wasn’t energy efficient?

Would you be more inclined to choose an energy efficeint home if the Stamp Duty you needed to pay was reduced?

That’s the proposal of think tank Policy Exchange, which has suggested linking Stamp Duty to the energy performance of properties, so that those homes lacking in energy efficiency should be subject to higher rates of Stamp Duty.

By promoting energy efficiency in homes, the think tank’s report argues bills could be reduced while cutting carbon emissions in one of the cheapest ways possible.

And it reckons that by embedding efficiency into the housing market and house prices, more homebuyers would be encouraged to purchase energy efficient homes.

Other policies could include reforming mortgage affordability tests and encouraging lenders to offer energy efficiency mortgages, the report said.

Room to improve

The Policy Exchange also suggested that a Stamp Duty relief could apply if energy efficiency improvements are made to a property within 12 months from the point of purchase.

The reforms should be gradually phased in with the adjustment to Stamp Duty no more or less than £2,500, regardless of property value, it added.

Richard Howard, author of the report, said: “Improving home energy efficiency can save households money, as well as substantially reducing their carbon emissions. Policies which link property values more closely to energy performance could kick start an energy efficiency revolution in this country.

“By reducing the transaction costs and increasing the mortgage available for a more energy efficient home, the government could nudge people into making improvements to the efficiency of their home, which would not only add a premium to their property but would also reduce their energy bills.”