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Concerns Mount as UK Government Ponders New Green Tax

By David Holmes on July 26, 2010

As if the housing market had not endured enough difficulties in recent times, it has been reported that the coalition Government is considering a new green tax that could add around £850 to the cost of buying a typical home.

Furthermore, new owners would be required to spend at least £15,000 on energy efficiency improvements before they would be entitled to a rebate. According to estate agent Steve Thomas, of Townends, the plans are sheer “madness”, whilst Nicholas Leeming of argued: “Some 65 per cent of UK homes were built before 1965 and, in London, 27 per cent before the first world war. This would clearly be unworkable”.

The new green tax, which was actually commissioned by the former Labour government, would require new buyers to shell out an additional 0.5 per cent stamp duty on homes that were considered to have a poor energy rating. As with many such schemes, however, a carrot and stick approach is adopted; if the homeowner can improve the energy rating within one year of purchasing the home, up to twice the additional stamp duty could be reclaimed from the Green Investment Bank.

Unfortunately, improving the energy efficiency of an old home can be a difficult and expensive endeavour in some cases; installing energy efficient central heating boilers, loft insulation or cavity wall insulation and double glazing are typical examples of the ways in which energy efficiency can be improved at the domestic level.

Applying only to homes for sale with F and G energy efficiency ratings, the new green tax would aim to encourage homeowners to improve their properties to E or higher. As the housing market continues to struggle following the credit crunch and global recession, however, many industry experts have spoken against the new tax.

Rosemary Rogers of warned that the green tax would “stop the already fragile [housing] recovery in its tracks”, whilst many others have argued that those most affected by the plans would be the relatively young and poorly paid; indeed, wealthier home buyers would be in line to receive the highest stamp duty rebates.