The government should encourage home buyers to purchase energy efficient homes by reducing stamp duty for homes with a high efficiency rating, according to a new Policy Exchange report published today. Lenders should also provide energy efficiency mortgages, the think tank argued in its Energy Efficiency Policy report.

Policy Exchange argued that previous schemes, such as the Green Deal failed to make a real impact on the energy efficiency of housing stock as the offer was “not sufficiently compelling”. Green Deal loans were only taken up by 16,000 households.

Energy efficiency should be embedded into the housing market and house price by linking stamp duty and mortgage affordability to the energy performance of a property, according to the think tank.

Richard Howard, author of the report, said: “Improving home energy efficiency can save households money, as well as substantially reducing their carbon emissions. Policies which link property values more closely to energy performance could kick start an energy efficiency revolution in this country.

“By reducing the transaction costs and increasing the mortgage available for a more energy efficient home, the government could nudge people into making improvements to the efficiency of their home, which would not only add a premium to their property but would also reduce their energy bills.”

Read the full report: Energy Efficiency Policy

More energy efficiency news: New “less ambitious” energy efficiency obligation to save suppliers £800 million per year

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