Rethink required on landlord share of energy improvement costs

Proposals for a blanket £10,000 cap on landlord contributions to the cost of improving the energy efficiency of their rented properties need a rethink, the National Residential Landlords Association has told the Government.

As things stand it is likely there will be requirement that from 2025 all new tenancies in the private rented sector should be in houses with an Energy Performance Certificate rating of C or better. Further, this should apply to all private rented properties by 2028.

In meeting these targets, landlords will be expected to pay up to £10,000 towards the cost of necessary improvements, suggested the Government in its consultative on the proposal (to which it still has to respond).

But, said the NRLA, this is unrealistic and is based on a misguided assumption that all landlords are property tycoons with deep pockets. Private landlords make an average net income from property of less than £4,500 a year, it said. The proposal requires a rethink.

It would be better, said NRLA, for the cap in landlord contributions to be put at between £5,000 and £10,000, the actual amount varying according to average market rents achieved in the area in which each property is situated.

Alongside this, it is also calling for tax reliefs to support investment in improvements, including a decarbonisation tax allowance and VAT exemptions.
‘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’, said NRLA chief executive Ben Beadle.

‘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’.