Onward, Bright Blue and the Conservative Environment Network have backed plans for a ‘Rebate to Renovate’
The endorsement comes as new research reveals the least energy efficient homes located in ‘levelling up’ areas
The average household could expect to see an annual saving of £348 in bills were they to upgrade the energy efficiency of their home
Leading centre right think tanks Onward and Bright Blue, along with the Conservative Environment Network, have backed plans to incentivise homeowners to increase the energy efficiency of their properties through a stamp duty rebate.
The policy - known as the ‘Rebate to Renovate’ - would see people benefit from a stamp duty rebate if they made improvements to the energy performance of their homes within two years of buying the property.
The endorsement comes as new analysis published today by the Better Homes Alliance-the independent group of organisations including Lloyds Banking Group, E.ON UK, Santander, Kingfisher, Knauf Insulation and the Energy Efficiency Infrastructure Group leading the call to introduce a Rebate to Renovate - highlights the importance of addressing the problem of improving the UK’s housing stock, which is some of the leakiest in Europe.
Key findings include:
Using EPCs as an example measurement, 59% of homes in England are considered energy inefficient, with our housing stock accounting for nearly 23% of UK carbon emissions.
19 of 20 local authorities with the least efficient housing stock are in areas in need of ‘levelling up’ (Priority 1 and 2). More than half - 12 of 20 - of those local authorities are in areas defined by the government as most in need of levelling up (Priority 1)
It would cost the average UK household £8,338 to upgrade their property to a decent standard of energy efficiency, according to the English Housing Survey. In some areas - such as the Malvern Hills - this rises to £11,163, while the average wage is just £25,900, highlighting the difficulty of driving improvements without a rebate to incentivise homeowners.
The average household could expect to see an annual saving of £348 were they to upgrade the energy efficiency of their home, based on pre-energy crisis prices. In some parts of the country - for example, households in West Devon - annual savings could be in the region of £576 a year.
The ‘Rebate to Renovate’ would be applied if energy improvements are made to a household within 2 years of purchase - a stamp duty rebate would be paid to the homeowner on the costs of upgrading their homes.
Adam Hawksbee, Deputy Director at Onward said: “Homeowners want to make improvements to their properties but many people are unable to due to the significant costs involved. This is particularly true for people living in low value homes in poorer parts of the country.
“We need to find ways to incentivise, not penalise, people to retrofit their homes. That is why the government should consider the idea of a Rebate to Renovate, a practical solution which will help bring down energy bills and decarbonise our inefficient housing stock."
Ryan Shorthouse, the Executive Chair of Bright Blue, has said: “Hitting net zero by 2050 is both ambitious and essential. While progress in decarbonisation has been made in key economic sectors, emissions from the residential sector have risen steadily. Policies such as the Green Deal, Green Homes Grant and Boiler Upgrade Scheme have ultimately been ineffective. Thus we need stronger policies to ensure households retrofit their homes with the necessary energy efficiency measures and low-carbon technologies. It makes sense to have a strong incentive at the point of moving into a house, as this is the time that homeowners are most likely to be open to making major improvements”
Sam Hall, Director of the Conservative Environment Network said, "Since the Prime Minister has ruled out mandating higher energy efficiency standards, it is important that households are instead offered incentives to insulate their homes in order to achieve our climate targets. A 'Rebate to Renovate' scheme would be an effective way to incentivise much-needed energy efficiency improvements in homes. It would accelerate progress on improving the UK’s housing stock, which is the leakiest in Europe, while easing pressure on household bills and making the UK more energy secure. The policy would also go with the grain of consumer behaviour, encouraging people to insulate their homes as part of wider renovations after moving in, and help lower the overall tax burden."
Sarah Kostense-Winterton, Chair of the Energy Efficiency Infrastructure Group (EEIG), commented ’The Better Homes Alliance has highlighted the urgent action needed to address the UK’s leaky and energy-wasting housing stock, to bring down energy bills permanently and reduce our energy demand.’
‘A ‘Rebate to Renovate’, based on the EEIG’s energy saving stamp duty proposals, is an easily implementable and affordable way to empower consumers and communities by incentivising millions of homeowners to upgrade their homes using the revenue-neutral incentive. The EEIG are looking forward to engaging on the detail of how to implement this transformational policy into practice.'
Notes to editors:
More information on the Better Homes Alliance can be found here: betterhomesalliance.com. The full research can be found on the website.
Secretariat support is being provided by WPI Strategy. For more information, contact jade@wpi-strategy.com
The Rebate to Renovate could be revenue neutral for the Treasury for homes over a certain threshold, with the cost of improvements paid for by adjustments to standard stamp duty. An enhanced rebate would be applied to homes which fall under the stamp duty threshold. To incentivise all homeowners to make the necessary improvements to improve energy efficiency a tapered grant would be applied for homes under a certain value. Economic analysis indicates this grant would cost the Treasury approximately £3 billion whilst inefficient housing currently costs the taxpayer around £12.7 billion over two years in energy costs. In Priority 1 Levelling Up areas analysed, the average house price is £256,150 approximately. As an example, North Norfolk (Priority 1 and the third worst performing for energy inefficiency) registers an average property price of £354,095 according to Rightmove.
Using a modelled example of a typical 1900s end-terrace house worth £310,000, we can demonstrate the Rebate to Renovate in practice: If the property was upgraded to be energy efficient with a loft insulation top-up, internal wall insulation, additional low energy lights and a heat pump the homeowner would save £570 per year on energy bills whilst receiving a £9,000 enhanced rebate on the upfront costs after measures were installed. The upfront costs of the upgrades would be absorbed into an interest-free addition to a main mortgage to ensure the home buyer could undertake the necessary improvements.
For more information on the specific Rebate to Renovate policy proposal, please contact sarah@theeeig.co.uk