Stamp duty: TSB and Shawbrook join mortgage lender call for reform before Budget
A group of mortgage lenders and brokers have called on the government to refund stamp duty for homeowners in a bid to accelerate energy efficiency improvements in UK housing and reduce national emissions.
TSB, along with Shawbrook, the Mortgage Advice Bureau (MAB) and Leeds Building Society, have called on the government to provide more support for the transition to environmentally-friendly homes.
“While there is no silver bullet, a fiscal incentive – such as a stamp duty rebate – is a crucial lever that government could help pull to unlock investment,” Roland McCormack, director of mortgages at TSB, told City PM.
“Many homeowners recognise that decarbonising their home can help them keep warmer for less, but too often installation costs remain unaffordable,” he added.
The proposed stamp duty policy would offer a full or partial refund for buyers of energy-inefficient homes who refit them to an EPC rating of C or above.
Around 16 million homes in England and Wales require retrofitting to meet the Government’s goal of all homes having an Energy Performance Certificate (EPC) rating of C or above by 2035.
A ‘crucial lever’ to unlock investment
A similar suggestion was made in 2021 by the UKGBC, with a plan to add stamp duty to homes with low energy efficiency.
However, the policy was not taken up the Government and the only energy-related relief under the current regime is for zero-carbon homes, which are eligible for full stamp duty tax relief if they change hands for under £500,000 and partial relief if they are over the threshold.
Emma Cox, managing director of real estate at Shawbrook, warned that without more government support the 2030 EPC target will “become unachievable”.
“Not only will this halt progress but there is a real risk that the rising costs of retrofitting and installing upgrades could be passed onto tenants and will undermine efforts to increase provisions of affordable housing – an unnecessary effect on a market already fraught with challenges,” Cox added.
The MAB yesterday wrote a letter to the government expressing their support for stamp duty reform.
“Any meaningful reduction in national emissions must include a robust strategy to decarbonise the buildings sector… Given the scale of this challenge, potential and existing homeowners will require far greater support and incentivisation than what is currently being offered,” the MAB warned.
“Sooner or later, first time buyers and homeowners will face the need for significant investment to upgrade their homes,” the group wrote, adding that “homeowners will need to invest in improved insulation and potentially explore alternative heating and energy sources”.
A UK Government spokesperson said: “We are boosting home energy standards to lift one million households out of fuel poverty, including through our Warm Homes Plan which offers grants and loans for insulation and low carbon heating,” but stressed that tax policy decisions weren’t publicised outside of fiscal events.
Calls for stamp duty relief grow
As it currently stands, the nil rate stamp duty threshold is set to fall from £250,000 to £150,000 at the end of March 2025, and from £425,000 to £300,000 for first-time buyers.
The threshold was reduced in 2022 to boost the property market.
The group of lenders are not the only commentators to have called on the government to implement or extend property-related incentive schemes, with calls for reform growing ahead of the budget.
Anthony Emmerson of mortgage experts Trinity Financial told the Winkworth’s Property Exchange podcast this week: “The last time we had a stamp duty holiday and incentives for first time buyers up to certain levels, it was all taken very positively by the market.
“It created a lot of first time buyers to be able to enter the market without too many hurdles and requirements for much greater levels of deposits and cash to be able to pay these fees. I think it would be very well received.”
Property giant Rightmove similarly called on the Government to retain the stamp duty threshold for first-time buyers earlier this year.
Tim Bannister, Rightmove’s property expert, said: “Stamp duty is a barrier to movement, and keeping the existing thresholds seems like a logical step to providing some first-time buyer support.”