Zero carbon homes — 2016 here we come

What is a zero carbon home?

The technical definition has not been finally settled but the Treasury is now consulting on how to define a zero carbon home. Once the definition is agreed, it will be included in the draft Treasury Order (Statutory Instrument) and this will come into force after Royal Assent is granted to the Finance Bill 2007.

However, the government (and primarily the DCLG) has published various draft policy documents in which it has proposed measures to assist in improving the environmental standards for new residential developments. The target is for all new homes to be zero carbon homes by 2016. These homes are required to produce “zero net emissions of carbon dioxide” from all energy use in the home. This will necessitate the use of: renewable energy and microgeneration (for example, solar panels, wind energy), insulation; zero carbon energy technology for heating/hot water; eco-labelled white goods; and provision for reduced use of motor vehicles (for example, cycle storage, space to set up a workspace at home). This will be measured using a grading system introduced in the code for sustainable homes.

What incentives were offered in the last Budget to encourage developers to provide zero carbon homes?

In the Budget, it was proposed to introduce a stamp duty land tax (SDLT) relief to promote the market for zero carbon homes, raise public awareness of the benefits of zero carbon living and encourage use of microgeneration technologies.

The relief will provide exemption from tax liability for homes with a purchase price of less than £500,000 and will provide a £15,000 reduction in tax liability to all homes worth more than £500,000. The relief is only available at first point of sale and is subject to the developer obtaining a certificate, acknowledging the property has been developed to a zero carbon standard. This will be through the energy performance certificate system which is used to measure energy efficiency in accordance with the Building Regulations 2000 and the code for sustainable homes.

The relief will be claimed on the land transaction return form and is intended to have no administrative impact on public sector and developers.

The SDLT relief scheme will be re-evaluated before it ends in 2012 to determine whether it has achieved the objectives set out by the Treasury.

What planning policy is behind this movement to zero carbon homes and how will this affect a development?

The DCLG’s focus on initiatives through building and planning regulations to reduce the effects of providing new developments on climate change and improving environmental standards for new residential development is more specifically seen through:-

• Planning policy statement PPS22 on renewable energy, which requires local authorities to implement policies to promote the use of renewable energy sources and allows them to set minimum percentages for on-site renewable energy generation in new developments;
• The London Plan includes the mayor’s energy strategy which requires 10% of each new development’s energy to be generated from renewable sources. Following the consultation period, the mayor, in partnership with London Renewables, will produce supplementary planning guidance on renewable energy that will provide broad guidelines to define locations where stand-alone renewable energy schemes would be appropriate and set criteria for the assessment of such schemes.
• Draft supplement to planning policy statement PPS1, consultation on which ended in March 2007, sets out how the government expects local and regional spatial strategies to identify areas capable of sustaining carbon neutral development, seek to reduce the need to travel (especially by car), maximise opportunities for renewable low carbon sources of energy supply and look favourably on proposals for renewable energy sources;
• The code for sustainable homes has been published by DCLG and will form the basis of future Building Regulations setting out a single national standard to guide design and construction of residences by grading homes on levels of energy efficiency (1 to 6 stars – ie, zero carbon).

An increasing number of local planning authorities are either operating or about to operate a local plan policy requiring developments over a certain size to include on-site renewable energy equipment to reduce carbon dioxide levels (by approximately 10%). It is clear that these initiatives will have a major impact on new developments, and developers need to consider the best ways to address these requirements now.

Importantly, developers should be aware that the South West Regional Assembly is considering amending its draft regional spatial strategy to require major developments to be 44% more efficient than Building Regulations by 2008 and to achieve zero carbon by 2011. Developers will be well advised to participate in the formulation of regional and local plan policy, in particular, in identifying locations suitable for sustainable development and the standards required. Such input is essential as developers will bear the cost of achieving those targets through design and technologies in the initial land purchase price.