Ross Clark

The trouble with a green stamp duty tax

The trouble with a green stamp duty tax
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Should homebuyers have to pay a higher rate of stamp duty if the property they are buying has a low energy rating? After all, motorists already pay a higher rate of road tax if they are buying a new car with high fuel consumption. The stamp duty idea has been advanced by a trade body called the Energy Efficiency Infrastructure Group, which takes the example of a two bedroom end-of-terrace property with an agreed sale price of £250,000. At present, the buyers would pay stamp duty of £2500 (or zero if they were first time buyers). Under the new system they would pay £847 if the property had an energy performance certificate (EPC) rating of A, rising to £4796 if it had a rating of E. They would be able to gain a rebate if they undertook energy improvements within the first two years which succeed in improving the property’s rating.

Sounds fair? Not if you are already struggling to get yourself on the housing ladder and can’t afford to buy a new home – which almost always attract a premium. The chances are that after struggling to put together a deposit and pay a mortgage you will have very little cash. And if you do have any money to spare, every extra penny you are forced to pay in stamp duty is a penny less you have to spend on home improvements – including ones which improve the energy efficiency of your home.

The high road tax bands for cars recognise that older, less-efficient cars tend to be owned by the less well-off – which is why the extra tax is loaded onto the first years of a car’s life, after which it drops to the level of any other car. It is there to encourage motorists to buy new cars which are energy efficient. Yet the stamp duty proposal would apply to all homes, old or new. There is another big difference with the stamp duty proposal compared with road tax. While official fuel-efficiency data for cars is often questionable – we have seen how some manufacturers have written software into cars to instruct their engines to perform differently when it detects they are in test mode – it is at least reasonably easy to test a car to see how much fuel it is consuming under various conditions. Assessing a property for an EPC, on the other hand, does not involve measuring how much energy it is consuming. A lot of it is guesswork. I have seen two EPCs for flats in the same building. For one, which received a ‘B’ rating, the assessor had written of the walls: 'wall insulation (assumed)' and on the other, which was given a ‘D’ rating, the assessor had written 'no wall insulation (assumed)', And yet on an energy assessor’s guess a buyer could be forced to shell out thousands of pounds in extra stamp duty.

Moreover, EPC ratings are not actually based on carbon emissions – they are based simply on energy costs. A number of developers have complained that they have replaced gas boilers with heat pumps – as the government wants us all to do – only to find that the EPC rating actually went down. So much for trying to save the planet.

It would be easy to dismiss the proposal by the Energy Efficiency Infrastructure Group as the work of a vested interest – there is a little clue in the name why they should be so keen for us to spend money on home energy improvements. But the proposal by the government’s own Climate Change Committee is even worse: it has proposed that the sale of properties only be allowed from 2028 if they score an EPC rating of C or above – something which is only currently achieved by 42 per cent of homes in England and Wales. It seems to have been lost on the committee that one of the main reasons for selling a home is financial distress: because you can’t handle the mortgage or because you need to free up capital, say, for care. The Climate Change Committee is seriously suggesting that such people in such circumstance be banned from selling their home unless they have spent many thousands of pounds on energy improvements.

As I have written here before, all common sense seems to fly out of the window when it comes to anything to do with the climate.

Written byRoss Clark

Ross Clark is a leader writer and columnist who, besides three decades with The Spectator, has written for the Daily Telegraph, Daily Mail and several other newspapers. His satirical climate change novel, The Denial, is published by Lume Books.

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