Landlords may have to pay to make houses greener

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The government is proposing to change the rules for making buy-to-let properties use energy more efficiently, reported The Telegraph in July 2016.

Landlords investing in buy-to-let properties often buy old houses that tend to be less energy efficient, but they can apply for a Green Deal loan for energy saving improvements such as cavity wall insulation and new energy efficient boilers. This money is then repaid by the properties’ tenants who receive lower energy bills.

The new government Department for Business, Energy and Industrial Strategy is proposing that landlords pay for these improvements themselves.

The Residential Landlords Association is against this proposal. Its policy advisor, Richard Jones, is quoted in the aforementioned Telegraph article:

“Unless they make 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 upfront.”

Typical costs of making homes more energy efficient are £3,900 for gas central heating, loft insulation at £300 and cavity wall insulation at £500, according to The Telegraph. The government has pointed out that many landlords have a large volume of equity in their properties and this could be used to borrow money for improvements.

Buy-to-let landlords have to pay an extra 3% stamp duty for properties, and from next year there will be reductions in tax relief for their mortgage payments. The new chancellor, Philip Hammond, has indicated that he will not change this.

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