UK Finance has released a new report proposing radical action to achieve a Net Zero housing stock in the UK.
The report, “Net Zero Homes: Time for a reset”, calls for a “strategic reset” in the way all actors, particularly government, tackle the climate change challenge. It also looks to provide solutions to rising energy bills and their effect on the cost of living.
UK homes remain the least energy efficient in Europe, with heating of homes representing 14% of total carbon emissions. UK Finance estimates it will cost UK homeowners around £300 billion to reach the government’s required Energy Performance Certificate ratings alone.
The lenders’ association calls on the government to:
- Prioritise public funding to retrofit social housing. Funding should be used to expand the Social Housing Decarbonisation Fund, given its success. Prioritisation should be given to social housing most appropriate for heat pump installation, and retrofitting should also be focused on social housing areas with high rates of fuel poverty, to help reduce energy bills for residents.
- Provide government grants to vulnerable populations. These should cover the full upfront cost of energy efficiency improvements and low carbon heating systems. For households with a greater ability to pay for retrofitting, a smaller upfront grant should be offered with the option to supplement this with an interest-free loan or low-interest rate loan to cover the remaining cost.
- Amend Stamp Duty Land Tax (SDLT) to incorporate the property’s energy demand and carbon emissions. Stamp Duty rebates should become available if energy efficiency improvements are completed within two years of property purchase. The amendments to SDLT should be made after 2025.
- Amend Energy Performance Certificates (EPC) so they are fit for purpose. EPCs are an outdated way of representing energy efficiency, and there is a significant time-lag in updating the EPC database. Energy efficiency improvements must be reflected in EPC ratings on the date of installation.
- Implement minimum energy efficiency requirements. A minimum rating should be introduced for owner-occupied housing, required for the sale or re-mortgage of a property. This should be phased in between 2030 and 2050. The requirements should include exceptions for vulnerable populations who could otherwise become property prisoners.
The government has previously set out strategies to decarbonise the housing sector, and UK Finance say lenders are keen to work with them “to develop more detailed plans on funding, timelines, capacity, and capability to deliver”.
“Climate change is the number one public policy priority facing this and future generations. The challenge we face means we can no longer just consider our options, but instead need to see strong action. In housing this means addressing the impact of heating the UK’s 28 million homes,” said David Postings, Chief Executive of UK Finance. He continued:
“Our new report sets out a range of recommendations to help deliver net zero in the UK’s housing stock, ranging from supporting vulnerable people with the costs of energy efficiency improvements to providing grants and subsidies to upskill tradespeople.
The banking and finance sector is playing, and will continue to play, a key part in facilitating the transition to net zero. The transition must be done in a fair way that that does not leave anyone behind, which is why we believe that in order to make real progress everyone must work together, led by clear, decisive and supportive government action.”
Andrew Parkin, Chair of the Property Energy Professionals Association (PEPA), said:
“Whilst we agree with much of the UK Finance report, in particular that the level of SDLT paid should be tied to improvements in energy efficiency ratings, we are disappointed that the report doesn’t recognise that an overhaul of the EPC has been underway for quite some time and will continue into the future. Both the Government and the PEPA members’ accreditation schemes are determined that EPCs should be fit for purpose now and into the future.
The suggestion that minimum energy efficiency ratings should be phased in between 2030 and 2050 fails to recognise the absolute imperative to urgently improve the energy efficiency of buildings across the UK. PEPA remains supportive of a minimum energy efficiency rating of C being introduced on all private rented properties in 2025.”
