Property boss urges Sunak to ditch tax breaks for eco-friendly home owners in 2023
Plans to offer stamp duty refunds to home owners who make their properties more eco-friendly are simply “a bad idea,” one of Britain’s largest property associations has told City PM.
Banks last year urged the Government to incentivise changes by refunding stamp duty to buyers who pay for green upgrades within two years of making an initial purchase.
But the National Association of Property Buyers said the proposals were the wrong approach and should be ditched in 2023.
“We don’t agree with this idea. The Government needs all the money it can get right now, and offering tax breaks to property buyers who are arguably towards the top of the pile economically doesn’t seem right,” according to Jonathan Rolande, representing the APB.
“The recommendations also seem rather contradictory. Homes with a low EPC rating will be less desirable, and that presumably means they will be cheaper to purchase, allowing for necessary upgrades,” Rolande told City PM this morning.
“The hugely increased cost of electricity and gas should be an encouragement enough to take many of the cheap and easy steps to lift the EPC rating.”
Jonathan Rolande
“High ticket items such as solar or heat pumps will take years to pay for themselves but as most homeowners are in it for the long term this shouldn’t be an issue,” he continued.
Rolande argued that “a massive spike in demand would surely lead to inflation and a shortage of materials to carry out the work, not to mention the tradespeople required to do it.”
Pressing issue
Rolande said that “a more pressing issue” will be the requirement for landlords to have a minimum C rating, up from E, by April 2025, just two and a half years away.
“Again, although not usually the worst off in society, many landlords are left wondering how they will pay for upgrades after being hit with increased mortgage costs, tax changes and rafts of legislation,” he explained.
“In my opinion, making homes comfortable and cheaper to run for tenants should be the Government’s main focus.”
Jonathan Rolande
According to a recent analysis by UK Finance, the banking trade body, homeowners will have to pay up to £300bn in upgrade costs to meet the Government’s current green standards.
They say the cost of upgrading a home has soared as households rush to meet “net zero” targets, or risk paying higher mortgage rates in the future.
Banks warn this could 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.
That’s why lenders last week called on the Government to incentivise changes saying it would increase demand for energy-efficient houses and encourage homeowners to retrofit their properties.
Stamp duty
According to the UK Finance Report stamp duty rebates should only be implemented after 2025, when there would 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 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 energy efficiency did not always translate to improved ratings.