Owners of poorly insulated homes should not be allowed to sell or rent them until they have invested in energy efficiency measures, the Government’s advisory body on domestic energy use says.

The Energy Saving Trust said that the 5.5 million homes in the lowest two bands for energy performance — more than a fifth of all homes — should also be subject to higher council tax bills and additional stamp duty. It believes that tough measures will be needed to achieve the Government’s target of reducing carbon dioxide emissions from home heating by 29 per cent by 2020 and to “almost zero” by 2050.

The trust estimates that 85 per cent of the homes in bands F and G could be made fit to sell for less than £5,000. However, owners of the remaining 15 per cent face paying as much as £10,000 to upgrade their homes to a new minimum standard.

Since last October, all homes offered for sale or rent have had to have an energy performance certificate, which ranks them in one of seven bands, from A to G. The trust is advising the Government to make it illegal, from 2015, to offer for sale homes rated lower than Band E. There would be exceptions for listed buildings if the owners could prove that energy efficiency measures would damage their historic character.

The Government said in its low carbon White Paper last month that existing measures, which focus on giving advice and offering grants towards the cost of insulation, might not be sufficient to achieve reductions in energy use.

There are very few A-rated homes, which feature triple glazing, heavily insulated walls and ceilings and solar panels for heating water. F-rated homes include Victorian terraced properties with single-glazed sash windows and boilers at least ten years old. G-rated homes tend to be detached and have no loft insulation.

In an interview with The Times, Marian Spain, the trust’s director of strategy, said: “We need a powerful incentive to act as a backstop in case other measures do not work. To sell your home you would need to have done the basics to take it out of the F and G ratings. The final deadline should be 2015.”

Ms Spain said that homeowners were likely to recoup their investment, because buyers would be willing to pay more for a home with lower energy bills. The prospect of higher council tax would also help to push people into paying for insulation.

The trust is also recommending that planning permission for extensions should be made conditional on the whole home improving its energy performance.

Jonathan Stearn, of Consumer Focus, the government-funded watchdog for energy prices and fuel poverty, welcomed the trust’s proposals but said they needed to be balanced by improved grants to help poorer households to pay for insulation. “We need a mixture of carrot and stick,” he said. “We have particular concerns about those who can’t afford energy efficiency measures.”

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