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Landlords to face property ‘Green Tax’

Reasons to choose Wilson Browne

From April 2018, Landlords must raise the energy efficiency of homes to at least Band E. It is understood that more than 330,000 homes in Bands F and G, the worst insulated, need major work.

Until recently, Landlords could apply for loans from the Green Deal Scheme for improvements, which are then repaid by Tenants who benefit from lower bills. Unfortunately the new Department for Business, Energy and Industrial Strategy is proposing that Landlords pay upfront for measures such as insulation, cavity wall filling and new boilers.

It is understood that this move will affect 330,000 ‘Buy to Let’ Landlords who own homes that are less energy efficient, often from Victorian and Edwardian eras.

Landlords will complain that this is an extra stealth tax on top of all the other measures that threaten the finances of the sector such as 3% Stamp Duty surcharge on ‘Buy to Let’ investors and the proposed Tax Relief on mortgage payments being only claimed on the basic 20%. Clearly, Landlords will be forced to pass these extra costs on to Tenants in the form of higher rents. How are Landlords going to find such a large amount of money upfront?  Are Tenants going to be priced out of the market?  Will this lead to a further burden on the Local Authority to provide homes if Landlords are forced out of the market?

The Government has proposed a hypothetical £5,000 spending cap, but insisted that most Landlords will have to pay no more than £1,800 to meet the standards. It is believed however, that many efficiency measures cost much more. Gas central heating can cost £3,900, cavity wall insulation £500 and loft insulation £300. The Government has suggested that Landlords can meet the costs by borrowing more.

The Government states that data suggests that around 60% of privately rented properties are currently owned outright so they make the assumption that Landlords will have a significant amount of equity against which they might borrow. What about the other 40% of privately rented properties?

The Government claims that the overall impact on rent levels will be minimal as relatively few homes will be hit. It seems that 330,000 homes could not be seen as ‘relatively few’.
Landlords would be advised to check their Energy Performance Certificates and then put some money aside to meet any costs in order to be compliant if and when this proposal is made law.

For further information please contact our Specialist Team on 0800 088 6004.

Jennifer Laskey

Posted:

Jennifer Laskey

Partner

Jennifer is a Solicitor and Partner with 21 years experience advising clients in relation to litigated Will disputes. A Legal 500 recognised lawyer, Jennifer is a full member of ACTAPs and has resolved multi-million pound disputes for clients in Courts across England.