03 Nov UK Finance calls for amendments to stamp duty and EPCs in net zero push
Adjusting stamp duty land tax to incorporate the energy consumption of a property, and making energy performance certificates (EPCs) fit for purpose will support homes across the nation in reaching net zero.
In the Net Zero homes report, the study believes energy efficiency requirements should be applied for owner-occupier properties for sale or remortgage. The report explains that adjusting stamp duty for energy efficiency could increase the demand for sustainable homes and encourage people to improve their properties. These changes could be introduced with stamp duty rebates for those retrofitting their homes within a few years of purchase. UK Finance suggested introducing the scheme between 2030 and 2050, with the exclusion of vulnerable population groups.
UK Finance indicated that EPCs often focused on the fuel costs for heating a property and overlooked other recommendations. UK Finance believes the data should be updated in real-time as energy improvements to a property are made, rather than every quarter, and lenders can consider this in the decision-making process.
UK Finance explains that updates and improvements to energy efficiency don’t always correspond to an updated EPC rating, so EPC ratings often display an outdated representation of the property. There is a considerable time lag within the EPC database, with information published on a 4 to 6-monthly cycle. This time delay hinders the reliability of the EPC data for making decisions, particularly when lenders use this information to examine the EPC performance of a property.
UK Finance is urging the government to allocate grants for vulnerable populations covering the initial costs of energy efficiency improvements and low-carbon heating systems. For those who are liable to pay for the work, UK Finance believes a smaller grant scheme could be available combined with an interest-free loan to cover further costs.
The report indicated that the initial costs associated with retrofitting a home were a barrier to approximately 45% of people in the UK. The report said lenders must focus on establishing an inclusive transition to enable everyone to participate in these energy-efficient improvements. While additional green finance options are now available to people, UK Finance explains that uptake remains relatively low due to a lack of customer awareness, understanding or concern over potential costs.
UK Finance explains that the responsibility of the mortgage advisor in educating and ensuring home buyers and other relevant groups recognise the options is so valuable.
David Postings, the CEO of UK Finance, explains that Climate change remains the top public policy priority facing our current and future generations. The challenges require strong and decisive action, and in terms of housing, this means tackling the impact of heating covering 28 million homes nationwide.
Postings explain that the new report contains a set of recommendations to support the delivery of net zero in the UK housing market, ranging from assisting vulnerable communities with energy efficiency to offering grants and subsidies to upskill people.
UK Finance highlights that the banking and finance sector is and will continue to play a critical role in facilitating the transition to net zero. This shift must happen in a structured and fair manner that enables everyone to participate. Progress requires collaboration, driven by clear and decisive government action.
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