The government is considering implementing a new green tax that could add £850 to the cost of purchasing a typical home. The new plan would also require that the new home owner then spends a minimum of £15,000 on home improvements before they would trigger a rebate.

The plan was initially commissioned by the last Labour government, however the Coalition is considering the plan. The new scheme would make buyers pay an additional 0.5% on stamp duty if their home had a poor energy rating.

The property industry is outraged by the plans and has branded the idea as stealth tax that risks throwing the housing market into chaos.

The is already a mandatory energy assessment on all homes before they go on sale. The new green tax would apply to homes with F and G ratings. It is hoped that this will give the buyers an extra incentive to bring them up to grade E or better.

The move is a part of the government’s plan to to cut greenhouse emissions by 34% from their 1990 levels, by 2020.

But property experts believe any further expense heaped on buyers would damage the market. Steve Thomas of Townends estate agency calls the idea “madness”, pointing out that buyers would have to pay both the tax and “stump up for the upgrades”.

Nicholas Leeming of sales website Zoopla.co.uk says: “Some 65% of UK homes were built before 1965, and in London 27% before the first world war. This would clearly be unworkable.”

According to Nationwide’s house price index, the average cost of a UK home is now £170,000. Under the new plans, the stamp duty of £1700 would increase by £850. In order to secure a rebate of the £1700 around £10,000 to £15,000 would need to be spent on the home.

The two government departments considering the proposal – Energy and Climate Change, and Communities and Local Government – say the idea is only one of many measures under consideration.