Forget lower subsidies, the wind industry has a much bigger problem brewing

On the face of it, this has been a pretty good week for the wind industry. After a worrying month or so, in which George Osborne seemed to be listening to his party's MPs, they appear to have got away with a mere 10% reduction in the large subsidies they get paid to produce (and sometimes not to produce) wind energy.

But if I were in the business, a piece of news that has received rather less attention might be making me feel just a tiny bit tense. The Valuation Office Agency (VOA) - which sets property valuations for the purposes of council tax - appears to have accepted that having wind turbines near your house can (and does) reduce the value of houses.

Until now, all suggestions that this is the case have been firmly rejected by the industry. But this week the Sunday Times reported the case of a couple living 650 yards from a large windfarm near Braunton in Devon. They aren't trying to sell their house, but nonetheless, local estate agents value their house at £100,000 less than they did before the windfarm as was built, a result of the persistent noise and flickering (when the sun is behind the blades).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The result? The VOA has moved them from band F to band E. That saves them £400 a year. This makes sense.

We've written here often about land taxes and how land with the most value should be taxed more than other land. Council tax is the closest thing we have in the UK to a land tax, and it seems right to me at least that a negative land tax should be applied to property blighted by noise loud enough to be considered a statutory nuisance by the VOA.

But if you were the owners of such a property would that be enough? I suspect not. So what would you do about it?

My guess is that, now you had definitive legal proof that your finances had been materially affected by the windfarm, you would sue the windfarm developer. That's exactly what Jane Davis from Lincolnshire did in 2008. After having her request for a council tax cut approved she went on to sue the windfarm owners (including EDF) in the High Court. The case ended last year in a settlement that included a very tight confidentiality agreement (although according to the Sunday Times, the windfarm owners bought the house from Davis).

So how big a problem is this for the windfarms? So far, at least five homeowners have had their properties re-banded as a result of windfarms. But the real number is probably much, much higher only those applications that go to appeal are made public. "We do not record the number of occasions where a band challenge is made by a taxpayer due to the proximity of a wind turbine/farm", says the VOA.

I don't suppose this will stop the blanket of turbines moving across the country, but if all the homeowners suffering losses as a result of them sue, it is going to make the windfarm owners even more grateful than they already are to the Lib Dems and their efforts to keep subsidies high. It might even make them think twice about siting huge turbines within shadow distance of people's bedrooms.