Non-eco home? Prepare to pay more stamp duty

Buyers purchasing homes with low energy efficiency ratings could pay thousands of pounds in extra stamp duty, under proposals to help the Government meet its green homes targets.

The Government is said to be considering a plan to push homeowners towards eco homes via tax incentives and surcharges. These could swing buyers’ tax bills by tens of thousands of pounds and would affect house prices.

The Energy Efficiency Infrastructure Group, a trade body, has drawn up plans for a “green stamp duty” system that would offer tax incentives and disincentives on either side of an energy efficiency benchmark, such as an Energy Performance Certificate score.

David Adams, of the EEIG, recommended a one percentage point stamp duty adjustment in either direction.

Under the proposals, someone purchasing a “future homes standard” new- build with an EPC band A for £250,000 would save £1,653 in stamp duty. Their total bill would drop from £2,500 to £847.

However, a £ 250,000 house from the 1900s with an E rating would incur an extra £2,296 in taxes, more than doubling the total stamp duty to £4,796 – over five times higher than the bill for someone buying an energy efficient house of the same value.

This buyer would be eligible for a tax rebate after retrofitting the property to standard within two years of moving in. The estimated cost of works would be £ 14,000, leading to a tax rebate of £3,133. They would save an estimated £430 a year on energy bills.

Buyers of properties with the worst energy efficiency ratings, such as old, big houses, would incur nearly a three percentage point surcharge. A large detached house built in the 1900s with a D band EPC that sold for £2m would cost its buyer £ 53,903 extra in stamp duty.

Mr Adams said the measures would make buyers aware of the disadvantages of lower- graded properties. In addition, the proposals would encourage existing homeowners as well as buyers to improve energy efficiency to avoid the value of their property falling, he said.

A Government spokesman said: “Our reforms will deliver a fairer system for all, supporting homeowners and landlords to improve their home energy performance, cut energy bills and increase consumer choice. Huge progress is already being made to the energy efficiency of UK homes, and we are investing almost £6.6bn to support people to install energy efficiency measures across the UK.”