Are landlords to be hit with £5,000 energy efficiency costs?

Rumours are growing that buy-to-let landlords could be hit with a £5,000 cost to make energy efficiency improvements to their property under new Government plans.

Roughly 330,000 buy-to-lets, mostly thought to be Victorian and Edwardian properties, are likely to be affected by any proposals.

Green Deal

Previously, landlords could apply for loans through the Green Deal in order to improve the energy efficiency standards of their investment. In turn, these loans were repaid by tenants, who were paying lower bills due to the results of the works.

Now, the Residential Landlords Association has moved to express its concern over a proposal from the newly-formed Department for Business, Energy and Industrial Strategy. This proposal suggests that landlords should pay for improvements such as cavity wall filling and loft insulation.

From 2018, landlords will be legally permitted to bring the energy efficiency ratings of their properties to at least a Band E for new tenancies. For existing tenancies, the deadline to make these improvements is 2020.

At present, tenants living in a property with either a F or G property rating can request improvements from their landlord. Legally, landlords are not permitted to refuse these requests. If they do so, they could face substantial fines.

Are landlords to be hit with £5,000 energy efficiency costs?

Are landlords to be hit with £5,000 energy efficiency costs?

Costly for tenants?

Richard Jones, policy advisor at the RLA, warns that many landlords could have no choice to push rents up, in an attempt to cover the proposed £5,000 costs.

Jones observed, ‘unless the government makes funding available, landlords will be forced to pass these costs on to tenants in the form of higher rents. It could also make being a buy-to-let landlord prohibitive. They could struggle to find such a large amount of money up-front. Landlords have been harshly treated. This is an extra stealth tax on top of all the other measures that threaten the finances of the sector.’[1]

Should landlords be looking to raise rents, they must ensure that they follow the correct legislative procedure.

Any further developments on the proposals will be communicated in due course.




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