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Energy efficiency could be key to Stamp Duty cuts – Goldsmith

by: Eddie Goldsmith, chairman of the Conveyancing Association
  • 01/11/2017
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Energy efficiency could be key to Stamp Duty cuts – Goldsmith
We are just weeks away from the next Budget, which (as tradition dictates) means the industry is girding its loins for a growing debate around Stamp Duty reform.

Those requests tend to fall on barren ground, and there is nothing to suggest those of us calling for cuts to the additional property higher charges will be left rejoicing when Philip Hammond takes to the dispatch box. Or is there?

Hope may actually come in the form of the energy requirements for our homes and the government’s need to keep hitting its carbon emission targets.

There is no doubting the government has performed well in this area but this has been mostly down to cutting back on fossil fuel consumption, notably coal, rather than energy efficiency in the home for instance.

And here is possibly where we could see the government marrying up industry calls for action on Stamp Duty, in order to increase purchases, with the need to have properties topping the charts when it comes to energy.

And, lest we forget, this could be used to fend off any criticism from the consumer lobby that the government is u-turning on its commitment to charge landlords extra for their buy-to-let purchases.


Energy efficiency

There is however a rather large elephant in the room here.

In a recent interview energy minister Claire Perry suggested Stamp Duty levels could be cut to encourage owners to make homes more energy efficient, and thus more attractive to potential purchasers who would benefit from such a cut.

However, and here’s the rub, there is no doubt a lot of detail to be agreed on how this might look – what level would the property have to achieve on its EPC to be eligible for a cut? And also, would this actually be attributable to additional properties?

It would seem rather odd if it did not, given that landlords are already being tasked to improve their properties otherwise they cannot rent them out, so why would they not be able to push for the top echelons of efficiency and benefit from a Stamp Duty cut?


Wishful thinking

Part of me does think this might be wishful thinking on the part of our sector but, to my mind, there’s no doubting that the 3% additional Stamp Duty surcharge has had a significant impact on the level of transactions taking place.

Statistics from the Royal Institute of Chartered Surveyors (RICS) show demand from buyers has fallen, particularly in London and the South East, however conversely the Stamp Duty take that the Treasury picks up has increased, in large part due to the extra charges.

But, again, what happens if transactions continue to fall? How will the stamp duty take hold up? Plus, we have a government which is very publicly committed to more housing supply and to getting more people into homes, whether these are owner-occupier or private rental sector.

Indeed, the housing minister recently said that by not hitting its targets before the next General Election, the Conservative Party was effectively courting disaster.


Only positives

So, while the speculation will mount as we approach the Budget in terms of what (if anything) will change with Stamp Duty, one can only see the positives of a move which encourages more people to purchase.

Indeed, by hitching its wagon to the energy efficiency-Stamp Duty star, the government may have found a politically-viable approach to making the cuts that should deliver a much-needed impetus to transaction levels.

Something that should be welcomed by all housing and mortgage market stakeholders.


The last month has seen proposals to reform Stamp Duty, including replacing it with an amended Council Tax and easing the demands on shared ownership properties.

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