All landlords are property tycoons with deep pockets?

All landlords are property tycoons with deep pockets?

9:45 AM, 17th December 2021, About a month ago 34

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Proposals to force landlords across the country to pay up to £10,000 to improve the energy efficiency of rental properties requires a rethink, according to the national body for landlords.

In a consultation which closed in January, the Government proposed that by 2025 all new tenancies in the private rented sector should be in houses with an Energy Performance Certificate rating of C or better. It is proposed that this standard should apply to all private rented properties by 2028.

As part of this the Government has suggested that, in meeting these targets, landlords should be expected to pay up to £10,000 to make the necessary improvements.

Whilst the sector is still waiting for the Government’s response to this consultation, the NRLA is warning that the planned cap is based on a misguided assumption that all landlords are property tycoons with deep pockets.

NRLA research shows that private landlords make an average net income from property of less than £4,500 a year.

Recent figures have shown the scale of the problem the sector faces in meeting the Government’s ambitions. Across England over 58 per cent of private rented households have an energy rating below a C. Around a third (32 per cent) of private rented homes were built prior to 1919, some of the hardest to improve housing in the country.

The National Residential Landlords Association is calling on the amount that landlords should be expected to contribute to be linked to average market rents in any given area (known as broad rental market areas) as calculated by the Valuation Office Agency. Under the NRLA’s proposals this would mean the amount a landlord would need to contribute would gradually taper from £5,000 to £10,000, taking into account different rental values (and by implication, property values) across the country.

Alongside this, the NRLA is calling for a package of fiscal measures to support investment. This should include the development of a decarbonisation tax allowance, no longer applying VAT to energy efficiency and low carbon work and not charging council tax where energy improvements are being made to rental properties when they are empty.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “We all want to see as many energy efficient rental properties in the sector as possible. Besides being good for tenants, improvements made to rental properties ensure they become more attractive to prospective tenants when being marketed by landlords and agents. However, the Government’s proposals for the sector are not good enough.

“They rely on a misguided assumption that landlords have unlimited sums of money and fail to accept the realities of different property and rental values across the country.

“Ministers need a smarter approach with a proper financial package if they are to ensure their ambitious objectives are to be met.”



Comments

by Beaver

11:29 AM, 17th December 2021, About a month ago

On "...and not charging council tax where energy improvements are being made to rental properties when they are empty." I would add:

'And not revaluing properties for Council Tax purposes when they are improved'. I.e. if you spend the money in improving the property for the purpose or reducing its emissions you shouldn't be penalised for it by being moved up to a higher Council Tax band.

by NewYorkie

11:51 AM, 17th December 2021, About a month ago

Yet another move designed to force 'small' landlords out of the market. All the while, councils are becoming more and more desperate for housing from the PRS.

by Bemused

11:57 AM, 17th December 2021, About a month ago

At last some sensible proposals re tax are being made.

by Paul landlord

12:40 PM, 17th December 2021, About a month ago

All good points above.

But I would also put forward that rather than the energy inprovement costs being treated as capital costs, they should also be tax deductible as a revenue expense on the annual tax return. I don't believe we should have to wait until we sell the properties to get a tax allowance on an improvement we're forced to do than are choosing to do

by NEIL T

12:46 PM, 17th December 2021, About a month ago

Reply to the comment left by Beaver at 17/12/2021 - 11:29
"revaluing properties for Council Tax purposes when they are improved"
I've not heard that one before. Can you kindly point us to where you obtained this information from, please?

by NEIL T

13:03 PM, 17th December 2021, About a month ago

Reply to the comment left by Paul landlord at 17/12/2021 - 12:40Well, certainly the installation of double glazing no longer comes under improvements for tax purposes.
Copied from the .GOV website; One example of this is double glazing. At one time, replacing singled glazed
windows with double glazing was an improvement. Over time, double glazing
became the industry norm. This meant that replacing single glazing with
double glazing ceased to be an improvement, and capital expenditure, and
became allowable expenditure for tax purposes as it was simply replacing like
with available like.
I'd like to add that many properties have some sort of loft insulation. If you're one of the lucky ones then replacing this with the current standard of insulation would to my mind be R & R.
Spoiler alert, I'm not an accountant.

by hpbennett

13:27 PM, 17th December 2021, About a month ago

Adding more and more insulation to older properties usually results in condensation and mold. This then gives rise to accusations of poor housing conditions and villainous landlords. Buildings have to breathe.

I can see more investors heading for the exit.

by NEIL T

13:37 PM, 17th December 2021, About a month ago

No, not true. Insulation installed correctly with adequate ventilation works fine. Where did you get this, what I regard as, misinformation from?

by Beaver

14:17 PM, 17th December 2021, About a month ago

Reply to the comment left by neilt at 17/12/2021 - 12:46
There's lots of information on that on the internet. Here's an example.

https://www.ericwhitehead.co.uk/general/council-tax-band-increases-following-home-improvements

by Helen

14:57 PM, 17th December 2021, About a month ago

And where do the tenants live while the extensive work is going on? Any loss of rent during that time should be written in to any amount that the landlord has to pay before grants.

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