The British Property Federation (BPF) has warned that without urgent government intervention in relieving pressures facing those in the residential sector, the UK will fail to deliver on its 2050 net zero target
Retrofitting existing housing stock is a substantial challenge in the UK, as 58% of properties have an EPC rating of D or lower, and less than a fifth of homeowners plan to improve their property’s energy efficiency in line with the government’s net zero target.
The BPF argues that the government has a crucial role in supporting homeowners to ensure that the country reaches its 2050 net zero target, and is calling on politicians to zero rate VAT on building repair and maintenance of residential buildings to incentivize essential upgrades across the residential sector.
The current approach on VAT relief is ineffective
The current approach of VAT relief on the installation of energy-saving materials is ineffective as it fails to recognise that energy efficiency improvements are rarely carried out in isolation.
Commercial properties face a similar challenge. In London, 10% of buildings have an EPC rating of F or G.
The BPF is advocating for a reform of capital allowance in order to encourage investment in large-scale commercial retrofit projects and support and encourage long-term investment into carbon reduction and energy efficiency measures to help meet the 2050 net zero target.
An alternative form of tax relief for capital expenditure is needed
An alternative form of tax relief for capital expenditure that would provide full tax relief in one year and use a repayable tax credit system is needed.
The government should also take immediate measures to ensure that business rates are not a barrier to improvement and introduce improvement relief.
9 in 10 property organisations believe that the government will not deliver a net zero property sector
Recent research from the BPF in collaboration with JILL found that 9 in 10 property organisations do not believe that the current policy in place will deliver a net zero property sector by 2050.
‘Property owners face a real challenge in reaching net zero targets and complying with incoming legislative changes’
Melanie Leech, chief executive of the British Property Federation, commented: “80% of commercial and residential buildings that will exist in 2050, the deadline for reaching net zero, have already been built.
“The country’s homeowners and commercial property owners face a real challenge in reaching net zero targets and complying with incoming legislative changes. Failure to remove financial barriers to energy efficiency upgrades, is a failure to recognise the huge task the country faces in reaching net zero.
“The Government needs to recognise the importance of incentivising energy upgrades across both the commercial and residential property sectors in next week’s Budget. The Chancellor has a clear opportunity to alleviate costs for households and encourage investment in measures that improve a property’s energy efficiency.”
