In a speech on the environment, Tory leader Michael Howard explained that he saw adjustments to Stamp Duty as “a powerful incentive to increase home energy efficiency”, working in the same way that energy efficient cars benefit from reduced road tax.
Howard says that Britain must face up to its ageing, inefficient housing stock, at least two thirds of which have yet to benefit from any energy efficiency measures.
It is estimated that insulating the walls of 250,000 homes would result in annual carbon savings of around 500,000 tonnes.
He says: “Only radical measures will ensure that we make real progress in this area. Fiscal incentives have been used in the past to make real progress.
“They worked, for example, when we introduced differential fuel duty to promote the use of unleaded petrol. They exist at the moment with varying rates of vehicle Excise Duty.
“We are looking at a similar approach to encourage homeowners to become more energy efficient. Today it is not a priority issue for most homeowners. Through the tax system we have the opportunity to change attitudes and make even clearer the financial and environmental benefits of energy efficiency.”
The outlined reforms could work in either one of two ways. If the home has been upgraded already, the Stamp Duty could be reduced at the point of purchase. If the home has still to be upgraded, the new homeowner could make the improvements and then claim a rebate on the Stamp Duty they have paid.
He also suggested simplifying the current building regulations that relate specifically to energy efficiency standards, replacing them with one simple thermal target.