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Budget 2017: Affordable Homes must be affordable to live in – and not cost us the earth!

Blog by Lesley Rudd

So, we have now heard Philip Hammond’s budget and it is clear that the ‘broken’ housing market which the PM pledged to fix is a key focus. The Chancellor promised to build an economy ‘fit for the future’. He pledged 300,000 new homes each year by the mid-2020s. We must ensure that these homes are ‘fit for the future.’

The Treasury was already supporting the help to buy scheme and has now committed £44 billion capital funding, in loans and guarantees to boost support for housebuilding. There is no disputing that we need new homes and the Chancellor stressed the need for “affordable homes”.  When the term ‘affordable’ was used he was referring to the capital cost of a house – not whether it is affordable to run once the buyer or tenant has moved in.  Whether the owner or tenant can afford to live in the home once it is built is often dependent on good insulation and an efficient heating system. This is often overlooked.  Affordable homes must be affordable to live in! Young people who were a focus of the Chancellor’s speech need not only to be able to afford to buy a home but also to heat it once they live in it!

The energy efficiency of our buildings impacts how much energy we need to keep warm, how much is wasted and therefore how much we spend.  How energy efficient our buildings are and how we heat them, in turn impacts our emissions and our air quality – the environment was an area the Chancellor cited as important.

The Government is pushing to build significantly more homes which will last decades if not centuries. Our money (as tax payers) is helping to boost house sales through the ‘help to buy scheme’ but many are not fit for the future or low carbon despite this being the cheapest time to fit sustainable technologies. Many of these homes will need expensive retrofit to be 2050-ready and house buyers will find their energy bills are higher than expected – unaffordable homes!

An Energy Performance Certificate (EPC) gives a property an energy efficiency rating from A (most efficient) to G (least efficient). Only 1 in 5 new homes are rated Energy Performance band C and the average home emits 2.6 times more carbon than designed. It is not just our cars that emit more than we think! So new homes, far from making it easier to meet our carbon targets and tackle fuel poverty, are making it harder. This is unacceptable.

As Lord Deben Chair of the Committee on Climate Change said, “If you pay a bit more – and it is a very small amount – to produce a house to Passive House standards, and then you add the energy costs per month to the slightly increased mortgage cost, you will find that you are better off to build it that way.”

New homes are not the only problem as we strive to reduce energy bills and achieve our 2050 carbon reduction targets, as over 80% of the buildings we will live in in 2050 have already been built. Over 85% of existing homes are over 20-years-old and many are inefficient, expensive to heat, carbon intensive (using fossil fuel heating) and cold. The Government committed to bring all fuel poor homes up to EPC band C by 2030 in its  Clean Growth Strategy and cited an aspiration to bring all homes up to EPC band C by 2035. The Sustainable Energy Association is promoting a bill the ‘Domestic Energy Efficiency Bill’  to ensure that the Government’s aspiration to upgrade households to EPC Band C becomes a reality.

The commitment to abolish stamp duty for first time buyers shows how stamp duty variations, and other regulatory policies which target trigger points such as a house purchase, can drive certain behaviours. This is something the Sustainable Energy Association has been promoting to encourage increased uptake of energy saving measures and the purchase of more efficient homes. Ideas include varying stamp duty, conditional mortgages, council tax rebates, minimum EPC at point of sale and fiscal mechanisms such as help to buy ISAs, help to improve/zero interest loans and equity loans. Further details can be found in the SEA report ‘Energy Efficiency – A policy Pathway’.  We need to find innovative ways to encourage energy efficiency to reduce our energy bills and make our homes more sustainable. If stamp duty is to be used to help first time buyers on the housing ladder then we should ensure they are buying an energy efficient home that is truly ‘affordable’.


Lesley Rudd, Chief Executive of the Sustainable Energy Association

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Wednesday, November 22nd, 2017