The UK should introduce discounts and surcharges on stamp duty and council tax to push homeowners into making their properties more energy efficient, Savills recommended.
The UK needs a huge £330bn to bring all of its stock to an EPC level of C according to Savills, meaning the government’s green energy incentives are a drop in the ocean compared to what’s required.
This is based on recommendations and indicative costs given on EPC certificates, as well as costs like loft and cavity wall insulation. double glazing and replacing gas boilers.
Lucian Cook, head of residential research at Savills, said: “With the government likely to impose EPC targets for lenders, the cost and terms on which mortgage finance can be obtained have the potential to change the equation for those with a mortgage.
“However, even this will not go far enough. More than 10 million homes are owned outright – increasing by 1.6 million in just the past 10 years. These homes are typically older, less energy-efficient and change hands infrequently.
“This may mean discounts and surcharges on property-specific taxes such as stamp duty and council tax have to be considered by policymakers.
“These have the potential to increase the ‘green premium’ and ‘brown discount’ of housing, providing a greater incentive for owners to invest in energy efficiency improvements.
“However, they are likely to be highly politically sensitive, requiring, among other things, concessions for heritage properties.”
Between 2004 and 2017 carbon dioxide emissions from residential property fell by 26%, but they rose by 9% between 2014 and 2020.
The UK’s residential housing sector was responsible for emitting 67.7 metric tonnes of carbon dioxide equivalent (MTCO2e) in 2020, which is over one-fifth of all UK CO2 emissions.
From next year the government will introduce a scheme enabling landlords to claim grants of up to £5,000 to replace gas boilers with heat pumps or other zero-carbon energy sources from next year.
Meanwhile mortgage lenders have come out with a raft of green mortgage products, designed to give a better rate for those with a good EPC rating.
A third (30%) of homes in England and Wales built pre-war still carry an EPC rating of E or below, increasing to 47% for those built pre-1900, according to Savills research.
Cook added: “Existing regulation provides a framework to require landlords to ensure their stock meets the increasing minimum standards for energy efficiency in the rented sector, however, it will place a significant liability on both private and affordable landlords that is likely to result in significant restructuring of their portfolios.
“Decarbonising heating sources needs to go alongside improving the energy efficiency of our homes, but as things stand, energy cost savings and small changes to home values are currently not enough of an incentive for many homeowners who won’t see enough of a return on investment compared to other home improvements, to warrant the expenditure.”