Treasury suspected of 'cynical ploy' over tax relief on green homes

The goal of buying a zero-emission house, complete with tax relief of up to 15,000 on stamp duty, may not be achievable, say academics and analysts, after the Government last week announced what could be Britain's first eco-village.

Housing and planning minister Yvette Cooper on Friday unveiled the first 200 net zero-carbon homes in the country, to be built on a former hospital site near Bristol. The development will be powered by an "onsite biomass combined heat and power plant, which will deliver energy to all homes", according to a spokesman.

However, David Strong, chief executive of Inbuilt, a consultancy specialising in sustainable buildings, believes that few other houses will meet the zero-carbon standard. "In his last Budget Gordon Brown announced the zero stamp duty land tax [Z-SDLT] for zero-carbon homes," said Dr Strong. "Neither the press nor Parliament seems to have realised that the definition of a net zero-carbon home has been subtly changed in a way that makes it almost impossible to achieve Z-SDLT relief. Budget Note 26 provided a definition of a net zero-carbon home that would have been challenging, but achievable."

Budget Note 26 required onsite generation, either in the house or within the development, to be capable of offsetting all CO2 emissions from the house or the development's central heating, hot water and lighting requirements over a year. The householder also had to provide certifiable renewable generation on or off-site to offset the emissions created by the use of electrical appliances.

"However," said Dr Strong, "the statutory instrument [SI] for zero-carbon homes, published recently by HM Revenue & Customs, has profoundly changed the definition, in a way that will now make achieving Z-SDLT relief impossible, except in exceptional circumstances.

"The SI now requires that any offsite-generated renewable electricity must be connected to the site by private wires. This is clearly crazy how does the Government propose that a development of 20 homes on a congested inner-city site, or in a typical suburb, is going to be connected by private wires to an offshore wind farm or new small-scale hydro-installation?"

Dr Strong argues that the change is "utterly perverse and most observers feel it must be either incompetent drafting by civil servants, or more likely simply a cynical ploy by the Treasury to ensure the relief will never apply".

A Treasury spokesman said: "The zero-carbon standard set is challenging but the Government believes it is achievable with current technology. The regulations only recently came into force. It is therefore too early to assess whether there has been any home that has benefited from the Z-SDLT relief."