Landlords Encouraged by Possibility of Energy Efficiency Improvement Tax Relief

Landlords Encouraged by Possibility of Energy Efficiency Improvement Tax Relief

The new MEES are now in place, meaning that all new tenancies and those being renewed will require properties to have an Energy Performance Certificate (EPC) rating of E or better. With this change, the Residential Landlords Association (RLA) has suggested that any energy efficiency improvements made by landlords that are recommended on EPCs should be tax deductible.

From April 2020 these changes will also apply to all rental properties.

There are options for landlords who are not in a situation where they can afford to make changes to their portfolio. The Government have pointed out that they can register their property as unable to meet the new standards. However, a cap has been proposed, meaning that soon landlords might be expected to pay no more than £2,500 to make necessary efficiency improvements.

Despite such discussions of ways to eventually help landlords with the financial strain, the RLA believe that the improvements should also be tax deductible. This deduction is currently available for when landlords are making ‘repairs’ to a property, but not for any ‘improvements’.

Landlords Encouraged by Possibility of Energy Efficiency Improvement Tax Relief

Landlords Encouraged by Possibility of Energy Efficiency Improvement Tax Relief

Introducing such methods of support might be an encouragement to landlords to make big energy efficiency improvements over all of their properties, as well as just those currently affected by the MEES. This could result in big changes not only for the environment, but for energy bills as well. By lowering the cost of energy bills through the changes made to a property, landlords might attract more interest from possible tenants.

It would be vital to make sure any relief in tax is not abused, and by linking it to what is recommended on a certificate, such situations should be avoided.

RLA PEARL has recently undertaken research that has found such tax relief would encourage 61% of landlords to improve the energy efficiency of their properties.

Official data also shows that 6.6% of private rented homes in England have either an F or G EPC rating. This is down from 25.3% a decade earlier, which already shows the huge developments that have taken place.

David Smith, Policy Director for the RLA, has said: “Whilst considerable improvements have been made over the last decade, private rented homes currently falling below the new energy standards are some of the hardest to treat properties of the country’s entire housing stock.

“Given the importance the Government attaches to improving the energy efficiency of rented homes there is a strong case for giving work to upgrade this the same tax treatment as for repairs.”

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