The government wants privately rented properties to be more energy efficient, but should they provide a tax incentive for landlords to make this happen?

Since April this year, all owners of privately rented properties in England and Wales have been legally required to ensure that their homes achieve a minimum rating of E in their Energy Performance Certificates (EPCs) in order to operate, with fines of up to £4,000 imposed on any landlord who breaches the new rules.

While most rental homes in the country already achieved these standards, the owners of those that didn’t have had to invest in improving the energy efficiency of their properties in order to comply, while others have chosen to make changes to increase their EPC ratings even further than the minimum to make their homes even greener.

Costly renovations

However, making such improvements costs money, and the Residential Landlords Association (RLA) is now calling on the government to consider any such works carried out by landlords as a tax-deductible repair, in order to encourage higher standards in the buy-to-let sector.

One study conducted by the association’s research body PEARL revealed that as many as 37% of landlords who owned properties rated F or G, which accounts for just 7% of all privately rented homes, could not afford to carry out the works needed to increase the EPC rating, with average costs standing at around £5,800.

Better for tenants and landlords

RLA policy director David Smith said: “Whilst progress has been made, we need to be more ambitious for the country’s stock of private rented homes.

“Energy efficient homes are good for tenants and good for landlords. That is why we need to use taxation far better than we do at present to encourage a continuous culture of energy improvements.”

“Using recommendations on Energy Performance Certificates in this way is a clear and easy way of achieving this, and we call on the Chancellor to adopt the policy in his Budget.”

This would be particularly welcomed if the government decides to further increase the minimum EPC rating for privately rented homes to C by 2030, which is apparently being considered, as landlords would have to invest even greater amounts to get their homes up to standard. While many new-build properties are built to achieve an A rating, making them much more energy-efficient and cheaper to run, landlords with older homes could struggle to achieve higher ratings.