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Last Updated: Wednesday, 6 December 2006, 16:52 GMT
New homes to be 'zero emission'
Prospective buyers viewing house
A quarter of UK emissions come from homes
The majority of newly built homes in the UK should be "zero-carbon" by 2016, according to the pre-Budget report.

The government aims to achieve this target by exempting such homes from stamp duty for a limited period of time, starting next year.

At present, more than a quarter of carbon emissions come from households, adding greatly to global warming.

But the report did not say how this ambition will be achieved, with details not expected until the next Budget.

Critics say the cost of making a home "zero-carbon" will push up property prices, outweighing any tax exemption.

The ambitious move was announced within the pre-Budget report, which also saw increased taxes on flights and a greater commitment to energy efficiency.

Households account for more than a quarter of UK energy consumption.

'Greater incentives'

"Within 10 years, every new home will be a zero-carbon home and we will be the first country ever to make this commitment," said Chancellor Gordon Brown during his pre-Budget speech.

"For a time-limited period, the vast majority of new zero-carbon homes will be exempted from stamp duty."

But the proposals provide no details on how the government will ensure that new properties meet such standards, nor does it give a definition of a zero-carbon house.

"The plans for an exemption from stamp duty for these properties will be welcomed, but first we need some clear definitions about what a zero-carbon home is," said Adam Bainbridge, head of corporate tax at KPMG.

As a result, the proposal has met with reservation, at best - and at worst, criticism from those who say it lacks substance.

Kevin Griffin, tax director at Ernst & Young argues that the stamp duty exemption will create, on average, savings of 1-3% of the price for the buyer.

But the additional construction costs to meet a zero-carbon standard will be "far greater than this", while property developers and builders are likely to factor those costs into the price of the home.

"It is likely that substantially greater incentives will have to be offered to persuade the construction industry to make the necessary changes."

Others asked whether enough was being done to improve the energy efficiency of existing homes.

"If the test of an effective environmental tax is that it changes behaviour, it is questionable whether today's announcements will achieve this end," said John Manning, UK head of the environmental tax and regulation network of PricewaterhouseCoopers.

The plans for zero-carbon homes come in advance of an announcement by Communities Secretary Ruth Kelly on new policies regarding building rules, meant to guarantee that homes are energy-efficient and sustainable.

Zero-emission house

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