UK Finance has called for a “strategic reset” on net zero homes in its latest report which proposes action to achieve a net zero housing stock in the UK.

The report states that UK homes remain the least energy efficient in Europe, with the heating of homes representing 14% of the country’s total carbon emissions. 

UK Finance estimates it will cost UK homeowners around £30bn to reach the government’s required energy performance certificate (EPC) rating. 

In the report, UK Finance calls on the government to prioritise public funding to retrofit social housing. 

It suggests funding should be used to expand the Social Housing Decarbonisation Fund, prioritising social housing most appropriate for heat pump installation, and retrofitting should also be focused on social housing areas with high rates of fuel poverty.

It also recommends providing grants to vulnerable populations to cover the full upfront cost of energy efficiency improvements and low-carbon heating systems. 

For households with a greater ability to pay for retrofitting, a smaller upfront grant should be offered with the option to supplement this with an interest-free loan or low-interest rate loan to cover the remaining cost.

Meanwhile, it asks the government to amend the stamp duty to incorporate the property’s energy demand and carbon emissions. 

The report suggests stamp duty rebates should become available from 2025 if energy efficiency improvements are completed within two years of property purchase.

It also asks to amend EPCs to make them fit for purpose. UK Finance says EPCs are an outdated way of representing energy efficiency, and there is a significant time lag in updating the EPC database.

Energy efficiency improvements must be reflected in EPC ratings on the date of installation, the report notes.

The final recommendation is to implement minimum energy efficiency requirements. 

UK Finance suggests a minimum rating should be introduced for owner-occupied housing, required for the sale or re-mortgage of a property, being phased in between 2030 and 2050.

The requirements should include exceptions for vulnerable populations who could otherwise become property prisoners, it adds. 

UK Finance chief executive David Postings says: “Climate change is the number one public policy priority facing this and future generations. The challenge we face means we can no longer just consider our options, but instead need to see strong action. In housing, this means addressing the impact of heating the UK’s 28m homes.”

“Our new report sets out a range of recommendations to help deliver net zero in the UK’s housing stock, ranging from supporting vulnerable people with the costs of energy efficiency improvements to providing grants and subsidies to upskill tradespeople.”

“The banking and finance sector is playing and will continue to play, a key part in facilitating the transition to net zero. The transition must be done in a fair way that does not leave anyone behind, which is why we believe that in order to make real progress everyone must work together, led by clear, decisive and supportive government action.”