"This will not only benefit homeowners and renters by reducing their energy bills and carbon footprint, but also contribute to a more sustainable and resilient economy. "
- Ben Thompson, deputy CEO at Mortgage Advice Bureau
A group of lenders and mortgage brokers are calling on the Chancellor to introduce key reforms to stamp duty in the upcoming Autumn Budget, aimed at boosting energy efficiency in properties and stimulating the housing market.
The group, made up of Mortgage Advice Bureau, TSB, Leeds Building Society, and Coventry Building Society, proposes a stamp duty refund for homebuyers who retrofit their property to achieve an Energy Performance Certificate (EPC) rating of C or higher.
The group says a full or partial refund for buyers of energy-inefficient homes to an EPC rating of C or above would make these homes look attractive to buyers, and help to catalyse a greater level of upgrading of UK housing stock, alongside directly contributing to the UK's 2050 net zero targets by promoting greener homes and encouraging more property transactions.
Despite the previous UK Government setting a goal to ensure that most homes achieve an EPC rating of C or above by 2035, 60% of the UK's housing stock remains below this standard. 16 million properties in England and Wales will require retrofitting to meet this EPC benchmark.
Direct emissions from buildings have exceeded 85 MtCO₂e, with a significant proportion attributed to the burning of fossil fuels for heating. Buildings are also responsible for nearly 60% of the UK’s electricity consumption.
Ben Thompson, deputy CEO at Mortgage Advice Bureau, said: "We’re writing to the government as we want to collectively work together alongside the industry to accelerate the improvement of energy efficiency in the UK’s housing stock. This will not only benefit homeowners and renters by reducing their energy bills and carbon footprint, but also contribute to a more sustainable and resilient economy.
“A more energy efficient housing market can stimulate investment in green technologies, create jobs, and reduce our reliance on fossil fuels further. We urge the Chancellor of the Exchequer to consider these stamp duty reforms to help achieve both economic and environmental goals."
Emma Cox, MD of real estate at Shawbrook, commented: “We share the same concerns surrounding the UK’s decarbonisation progress in the housing stock. New EPC regulations could have a significant financial impact on landlords, who are already being squeezed by other policies. Our recent research found that 78% of landlords are concerned about the new EPC regulations, and nearly one-in-three (29%) believe targets are only achievable with support from the Government. It’s also worth acknowledging that the cost of improvements is consistent nationwide, but the impact is disproportionately higher for landlords with lower-value properties, making a £10k investment far more burdensome in the North than in London, for example.
“Landlords are motivated to make changes and having quality, energy efficient stock is critical to meeting decarbonisation goals. But the fear is that, without sufficient Government support, the 2030 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.
Full letter
Dear Chancellor of the Exchequer,
We’re writing to you from Mortgage Advice Bureau (MAB) as part of a group of leading businesses in the housing sector to express our concern about the pace of progress towards the decarbonisation of UK housing stock.
Despite the previous UK Government setting a goal to ensure that most homes achieve an Energy Performance Certificate (EPC) rating of C or above by 2035, 60% of our housing stock remains below this standard.
16 million properties in England and Wales will require retrofitting to meet this EPC benchmark. This undertaking is crucial if the UK is to fulfil its obligations under the Paris Agreement.
Direct emissions from buildings have exceeded 85 MtCO2e, with a significant proportion attributed to the burning of fossil fuels for heating. Buildings are also responsible for nearly 60% of the UK’s electricity consumption. 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 through existing lender schemes.
MAB joins many other industry stakeholders in urging the UK Government to introduce more robust incentives, such as a stamp duty rebate and expanded green financing options. These measures are essential to promoting the widespread adoption of energy efficiency improvements and low-carbon heating solutions, thereby ensuring that our housing stock is fit for the future.
The Government intends to reintroduce the requirement for landlords to ensure their rental properties attain at least an EPC rating of C by 2030, and this is certainly positive. However, we must recognise that in many instances, these upgrades will be substantial, potentially exceeding previous cost caps for landlords. Careful consideration must be given to how these costs are managed, preventing undue financial burdens from being passed onto tenants via increased rents.
It’s imperative that the Government also recognises the residential sector. Sooner or later, first time buyers and homemovers will face the need for significant investment to upgrade their homes. This need is particularly pressing following the rise in the energy cost cap. To keep heating and energy bills sustainable in the long term, homeowners will need to invest in improved insulation and potentially explore alternative heating and energy sources, amongst other measures.
While we acknowledge that certain legislation is already being considered, collectively more needs to be done. In terms of potential stamp duty incentives, a number of avenues could be pursued.
Homeowners could receive the full stamp duty amount back once retrofitting works have been completed. Alternatively, any improvements made could entitle homeowners to a rebate that covers the costs, which is taken from the stamp duty that has been paid. Moreover, homebuyers who purchase properties with an EPC rating below C and subsequently retrofit them could be eligible for a stamp duty rebate, with the amount determined by the improvement in the property's energy efficiency rating.
The housing sector is committed to working with you, your department, and your officials to accelerate the improvement of energy efficiency in the UK housing stock. This will not only benefit homeowners and renters by reducing their energy bills and carbon footprint, but also contribute to a more sustainable and resilient economy.
A more energy-efficient housing market can stimulate investment in green technologies, create jobs, and reduce our reliance on fossil fuels further. Our businesses are dedicated to driving positive change in the housing sector, and we’re prepared to work closely with you to achieve these goals.
Yours sincerely,
The undersigned
