Landlords step up calls for energy efficiency improvement tax breaks

August 8, 2018


Residential Landlords Association calls on Treasury to incentivise upgrades needed to deliver on new energy efficiency standards.


Landlords will today step up calls for the government to support improvements in energy efficiency across the private rented sector by introducing new tax breaks to help cut the cost of property upgrades.


The Residential Landlords Association (RLA) has confirmed its upcoming submission to the Treasury ahead of the next Budget will back government plans to strengthen energy efficiency standards for rented properties. But it will also argue that new tax relief measures could play a critical role in ensuring the standards are met and delivering on the UK's energy efficiency and carbon emission goals.


In April the government introduced new Minimum Energy Efficiency Standards (MEES) for commercial and residential rental properties requiring them to meet at least an Energy Performance Certificate (EPC) level E or above for new tenants. 


The rules apply initially to new tenancies or contract renewals, but by 2020 they will be extended to all domestic rented properties on the market and by 2023 all commercial properties.


The government is also understood to be considering strengthening the standard to a C or above EPC rating by 2030.


However, the RLA is today reiterating calls for a rethink of how to incentivise the property improvements that will be required to meet the standards.


The submission to the Treasury will call for "all private rented homes to be as energy efficient as possible". But it will also argue that to achieve this goal work carried out by landlords that is recommended when an EPC is issued should be considered a tax deductible repair. "This would encourage a culture of continuous improvements to properties rather than simply meeting set targets and leaving them there," the body said.


The news was accompanied by a new study from the RLA's research arm, PEARL, which secured responses from almost 2,700 landlords and found that 37 per cent of landlords with properties rated F or G currently claim to be unable to afford to bring their property up to at least an E rating. On average, such landlords reported that it would cost them almost £5,800 to bring their properties up to the required standard. 


Previous research by RLA PEARL has found 61 per cent of landlords think tax relief for energy efficiency works would encourage them to improve the energy efficiency of their properties.


The group said the proportion of private rented homes with an EPC rating of F or G has fallen from just over 25 per cent in 2006 to under seven per cent in 2016.


However, critics have argued more needs to be done to improve the energy efficiency of the poorest performing homes in order to both meet the UK's carbon targets and tackle fuel poverty.


"Whilst progress has been made, we need to be more ambitious for the country's stock of private rented homes," said RLA Policy Director, David Smith, in a statement. "Energy efficient homes are good for tenants and good for landlords. That is why we need to use taxation far better than we do at present to encourage a continuous culture of energy improvements. Using recommendations on Energy Performance Certificates in this way is a clear and easy way of achieving this and we call on the Chancellor to adopt the policy in his Budget."


The Treasury was considering a request for comment at the time of going to press.

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