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Stamp duty cuts proposed for energy efficient homes

Government proposes tax incentives for green properties

Stamp duty cuts proposed for energy efficient homes

The government has considered lowering stamp duty costs for greener homes, as a way of encouraging buyers and homeowners to make properties more energy efficient.

Climate change minister Claire Perry says the government is looking at new approaches to hitting ambitious energy efficiency targets – and stamp duty cuts are one of the options on the table.

The proposals form part of the Clean Growth Plan, released on Thursday, which highlights ways that carbon emissions could be reduced across the country.

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Energy efficiency and stamp duty

All properties brought to the market in the UK must have a valid Energy Performance Certificate (EPC), which grades the energy efficiency of homes from A (best) to G (worst).

By 2035, the government wants all UK housing to have a ‘Band C’ efficiency rating or higher.

Stamp duty cuts have been put forward as an option to encourage buyers to improve their new homes, and homeowners to bring their current ones up to scratch.

The government also hopes homeowners may boost the value of their property by making it energy efficient, creating an additional incentive to go green.

Ms Perry said: ‘I think it is more likely a home where insulation has been put in would attract a higher value, because the running cost of the home over its lifetime of ownership would be lower’.

As stamp duty is devolved, any changes would only apply to properties in England.

  • Find out more about how energy efficiency ratings work in our EPC guide and download an example of an EPC from 2016
  • Earlier this week, the government also announced plans to limit how much suppliers can charge for gas and energy. Find out what this could mean for you in our energy price cap story.

How stamp duty works

Stamp duty is a tax you pay when buying a home that costs more than £125,000, with rates tiered depending on how much you spend.

If you’re buying a second home or investment property, you’ll need to pay a 3% surcharge on the normal rates. Find out more about this using the links below.

Stamp duty is the subject of much political debate – and reform is regularly proposed as a way to encourage activity in the property market.

For example, former pensions minister Baroness Ros Altmann suggested just last month that stamp duty should be cut for people who are downsizing.

To date, however, the government has taken no concrete action to change the current system – so as yet it’s unclear whether either of these proposals will get off the ground.

EPCs in the private rented sector

If you’re a landlord, you’ll need to ensure your home achieves a minimum EPC rating of E by next April.

Separate reforms confirmed in July this year mean landlords face fines of up to £5,000 if they fail to bring their homes up to the required standard.

With 330,000 rented homes currently rated F or G on the EPC scale – and no exemptions for those who let listed homes – some landlords could face significant bills as they adjust to the rules.

You can learn more about how the new regulations will work by checking out our full story from earlier this year.

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