The Chancellor, Rishi Sunak, announced that homeowners will pay 0% VAT on energy saving home renovations over the next five years as he citied green renovations as a viable option to combat rising energy costs for households. However, other MPs saw the VAT cut on energy saving home renovations as ‘wholly inadequate’ as they believe more could have been done to aid households looking to make energy efficient renovations. A new landmark study from Cornerstone Tax found that making homes more energy efficient is becoming a necessity for homeowners, with 36% thinking that making their home more energy efficient is a priority for them in 2022, however, many are finding the price of doing so a major obstacle, resulting in a staggering 45% of homeowners finding it too expensive to make their homes more energy efficient without government support.
The 0% VAT cut is a welcome move for homeowners, who are searching for solutions to ease the increased cost of energy in their home, with external factors considerably affecting the price of energy, many experts believe that turning to eco-friendly solutions could be the answer. The rise in energy costs was caused, predominantly, by multiple energy suppliers going out of business amid a global energy crisis, thus meaning that prices inevitably rose. Price caps are set to rise by 48% on the 1st of April – this follows a £139 annual rise which was introduced last October. The increase in energy costs has caused considerable stress for numerous households throughout the UK, but for some, the solution could be turning green.
In the UK, homes are responsible for a fifth of the total of the UK’s carbon dioxide emissions, prompting the government to pledge that by 2035 every residential property should have an EPC rating of C or above as part of its long-term plan to tackle climate change. By making green renovations to your home, such as: loft insulation, solid wall insulation, ground source heat pumps and double glazing homeowners will make an estimated £890 savings every year, however, the cost which they occur when installing these features is a substantial obstacle for homeowners with costs in the thousands.
James Morley, Business Development Director at Cornerstone Tax discusses homeowners making their home more energy efficient:
“The 0% VAT cut is a welcome step for homeowners looking to make green renovations, but more help is still needed from the government to aid homeowners looking to make green property renovations. It seems that homeowners all over the country are seriously considering turning to green renovations to combat the rising costs caused by the energy crisis. By making your home energy efficient, homeowners will save money in the long run and contribute to the UK’s sustainability targets also.
The initial costs of making green renovations to your home is still a substantial obstacle for homeowners to overcome. Perhaps in the future the government can provide much needed support to homeowners who are looking to refurbish their home to make it more eco-friendly. There’s evidently huge demand for greener homes. The benefits of making your home more energy efficient can be substantial. You will feel a sense of pride in helping towards sustainability goals and it will cut costs in the long run.
“If you want the benefits of an eco-friendly home, without the extra expense or the hassle then the solution would be to buy a new-build property. However, homeowners have grown connections to their current properties and want to stay there – choosing to refurbish their current home rather than move to a new property.”