Energy efficiency plans ‘financially unviable’ say landlords

Government plans to introduce a minimum EPC of C for rented homes are ‘financially unviable’ for most landlords, according to new research commissioned by the NRLA.

Landlords will be expected to fork out up to £15,000 per property to meet the new minimum energy efficiency standards.

However, analysis of polling by independent research consultancy Pegasus finds that the limit most landlords can afford is around half that – a figure of £7,700.

Anything above this, landlords deem unaffordable.

Budget

The news comes after the Autumn Budget cut total funding for energy efficiency schemes by a quarter over the current parliamentary term, according to think tank E3G.

We have warned the Government it must not rely on the false assumption that landlords are a single class of wealthy individuals with deep pockets to finance improvements – in short, we are not fat cats.

According to HM Revenue and Customs, the average rental income declared by unincorporated landlords is £19,400 a year – significantly less than someone working full time on minimum wage.

And it isn’t just us pointing this out.

The lack of any targeted support for the rental market in the Budget when it comes to meeting the Government’s energy efficiency targets comes despite calls by the Committee on Fuel Poverty for ministers to consider new tax measures to support the investments needed. 

What do we want to see?

As we wait for confirmation of the Government’s final proposals – following a consultation earlier this year – we are calling for all energy efficiency investments by landlords to be made deductible against income tax.

We are also recommending the spending cap be graduated according to the value of a property.

We believe that without this there is a very real risk of exacerbating a north-south divide, placing a disproportionately higher financial burden on rental properties in lower-value areas.

NRLA chief executive Ben Beadle said: “We want all rental properties to be as energy efficient as possible.

"However, this isn’t going to happen without a serious plan to support the investments needed.

“Relying on the misguided belief that every landlord has limitless reserves to fall back on is not only wrong but will not get tenants any closer to seeing their homes made energy efficient.

“If the Government is serious about its plans, it needs to engage with the sector now to develop a clear, bespoke package to help responsible landlords invest in energy efficiency works.

“That needs to start by fixing a broken tax system which does nothing to encourage proactive property improvements.”