Purchasers of energy-efficient properties should pay less Stamp Duty Land Tax than buyers of homes with a poor energy performance.
The suggestion, which could see purchasers of energy inefficient home paying up to £2,500 more Stamp Duty, has come from think tank Policy Exchange.
It argues that embedding energy efficiency into the housing market and prices paid, buyers would be encouraged to buy energy efficient homes.
Policy Exchange argues that Stamp Duty relief could also apply if buyers made energy improvements within the first year of ownership.
The report also calls for lenders to offer ‘energy efficiency’ mortgages.
Richard Howard, author of the Policy Exchange report, said: “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.”