The selling and purchasing of a home is a critical trigger point for making refurbishments to a property. Buying a property is usually associated with paying a Property Transfer Tax (PTT), which can amount to significant costs to the purchaser. In this paper, we explore the potential for linking PTT to the energy performance of the building that is being sold and/or any energy efficiency improvements carried out after purchase. To our knowledge, such a mechanism currently does not exist anywhere in the world and, if designed carefully, could provide an important demand driver and financing mechanism for energy efficiency. An energy efficiency PTT would need to strike the appropriate balance between stimulating demand amongst consumers, while also ensuring the scheme is revenue neutral to the finance ministry. In the paper, we investigate how a PTT needs to be designed in order to achieve both aims.

We use two case studies (Germany and the United Kingdom) to illustrate how an energy efficiency PTT could work in practice. The two countries have very different PTT mechanisms in place, although the volumes of revenues are similar. In Germany, PTT levels are set at the regional level by the Länder whereas in the UK, England, Wales, and Northern Ireland set the same rates but Scotland uses different rate bandings. Based on the two case studies, we present ideas and the potential for PTT reform based on the energy efficiency of sold properties. We also set out further research needs and policy recommendations to put this concept into practice.