No Stamp Duty on Carbon Neutral Houses

The Chancellor recently announced tax breaks for the purchases of carbon neutral houses. This will be for a limited time only, and the details will be announced in the 2007 Budget.

What does that actually mean for you and me?

The Chancellor intends to reduce the carbon footprint of new homes to zero within ten years as a response to the Stern Review on the Economics of Climate Change, and our commitments under the Kyoto Agreement. Readers may also be aware that Building Regulations changed in April this year to address energy efficiency.

The Financial Times reported that close to one third of this country’s carbon dioxide emissions come from residential properties, and this must be reduced if the economy is to become lean and green. Research suggests that a three bedroom detached home produces 5.6 tonnes of carbon dioxide per year, a staggering amount when taken across the entire country.

Readers will recall that no stamp duty is payable on residential purchases up to £125,000, with duty then levied on the purchase price at a stepped rate of up to 4%. Under the new announcements, can a £1,000,000 new home be purchased after April 2007 at zero stamp duty rate if it is carbon neutral (thereby saving £40,000)? Guidance found in the 247 page Pre-Budget Report, published on 6th December, would suggest so. The challenge is finding such a home!

In simple terms, the concept of a carbon neutral property means the carbon dioxide emissions produced by that home are offset by energy saving measures and renewable energy production. The energy, which is saved or produced in your home, would rely on technologies already in place, albeit that they may well be expensive. Double glazing, insulation, and solar panels are some of the steps need to achieve the goal.

For many the issues of carbon dioxide emissions is now a serious issue and there will be demand for domestic renewable energy sources. This public upswing in “ownership” of the global warming problem may well filter through to new house builders. With the economic forces of supply and demand, and the surge in new homes forecasts, developers will grasp the opportunity and take advantage of a potential selling point.

Alastair Hargreaves is head of Move Forward

Published 25/01/2007.