Make Energy Improvements Tax Deductible Say Landlords

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MEES:

Energy efficiency improvements undertaken by landlords and recommended on Energy Performance Certificates should be tax deductible the country’s leading landlord organisation argues.

From 1st April, all new tenancies and those being renewed will require properties to have an Energy Performance rating of E or better. From April 2020 the rules will apply to all rental properties.

Whilst the Government has said that landlords unable to access funding to make such improvements can register that their property is unable to meet the new standards, it is proposing that in due course a new £2,500 cap be introduced on the amount a landlord should be expected to pay to make the necessary improvements to their properties.

The Residential Landlords Association is arguing that all improvements a landlord carries out that are recommended on an Energy Performance Certificate should be tax deductible. Currently landlords may make such a deduction for ‘repairs’ but not for ‘improvements’. Such a policy would support landlords in all property types to make ambitious energy efficiency improvements, beyond just those who are required to bring their properties up to the Government’s target.

Linking tax relief to what is recommended on a Certificate would help to prevent abuses.

Recent research by RLA PEARL has found that 61 per cent of landlords would be encouraged to improve the energy efficiency of their properties if there was tax relief to do so.

According to official data, 6.6 per cent of private rented homes in England are rated either F or G for energy efficiency improvements.  This is down from 25.3 per cent a decade earlier.

David Smith, Policy Director for the RLA, said:

“Whilst considerable improvements have been made over the last decade, private rented homes currently falling below the new energy standards are some of the hardest to treat properties of the country’s entire housing stock.

“Given the importance the Government attaches to improving the energy efficiency of rented homes there is a strong case for giving work to upgrade this the same tax treatment as for repairs.”

The Residential Landlords Association: The home for landlords

• The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties. A growing community of landlords who trust and rely on us to deliver day-to-day support, expert advice, government campaigning, plus a range of high-quality services relevant to their needs.
• At the RLA, we understand the challenges faced by a landlord – after all, we’ve been fighting their corner for over 20 years.
• We campaign to improve the private rented sector for both landlords and tenants, engaging with policymakers at all levels of Government. Our vision is to make renting better for everyone involved in the private rented sector.
• RLA PEARL’s recent research on taxation of the private rented sector can be accessed here
• The latest English Housing Survey for 2016/17 can be accessed here It finds that across England. 1.8% of private rented properties have an energy rating of G and 4.8% are rated F.  In 2006 the figures were 6.9% and 18.4% respectively.
• The English Housing Survey finds also that 35% of private rented homes were developed before 1919 compared to 20.6% of owner occupied properties and 6.6% of social rented housing.

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Energy efficiency deadline for landlords on Sunday

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EPC Deadline:

The deadline for meeting the new Minimum Energy Efficiency Standards (MEES) falls on Sunday 1^st of April (Easter Sunday), but according to ARLA Propertymark there are still thousands of landlords either not aware of the new rules or haven’t as yet done anything about them.

From next Sunday all rented properties on new lettings (including renewals) will have to comply with the MEES regulations or face a heavy fine.

Every buy-to-let property will have to meet the minimum energy efficiency rating and obtain an energy performance certificate rating of “E” or above, but it is evident that there are still many thousands of landlords with rental properties that fall into the F or G ratings bands.

With Sunday’s deadline looming, some landlords will face fines of up to £4,000 when they come to re-let or renew their tenancies, or otherwise face losses through having their property stood empty while it’s brought up to standard.

Any landlord in this position should be making plans now to bring their rental up to standard, otherwise they could also face difficulties when it comes to mortgage applications and renewals.

The Private Rented Property minimum standard – landlord guidance documents here

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Ground rent school boy error?

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Hi All, Ive made a bit of a school boy error here.

I have a small portfolio, and my last purchase around 4 years ago was a flat in South London had the following clause for the ground rent: Ground Rent £250 Reviewed every 10 years by a factor of 2 or by RPI whichever the greater.

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Eviction – This will make you angry!

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The housing charity “Shelter” have formally admitted that it can take a landlord 8 months (or more) to evict a tenant using a section 21 notice. The admission is in the form of their latest viral video campaign. Despite this

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Highly Commended Buy to Let Mortgage Broker of the Year

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We are delighted to report that another Property118 member Mark Edwards, MD and founder of Mortgages and Insurers Solutions, has led his company to winning the award for “Highly Commended Buy to Let Mortgage Broker of the Year” at the Business Moneyfacts Awards 2018.

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Rogue Landlords renting out Overcrowded and Dangerous Homes targeted

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New Legislation:

The Ministry of Housing, Community and Local Government (MHCLG) is currently putting new regulations before parliament (see link below) with the objective of keeping the pressure on rogue landlords. In a bold move to crack down on overcrowding and dangerous living conditions experienced by a minority of tenants in HMO’s, MHCLG want to make life as difficult as possible for those landlords who will not follow the rules.

Local councils are being encouraged to inspect more and more properties, with new powers to tackle that minority of rogue landlords who rent out overcrowded or dangerous properties. Councils will be able to impose fines of up to £30,000 for non-compliant landlords.

From the 1st October this year the regulations will empower councils to specifying minimum bedroom sizes, and they will be given the necessary powers to quickly enforce those limits, with the now expanded mandatory HMO licensing scheme setting down these and a host of other conditions:

• Floor area of any room HMOs used as sleeping accommodation by one person aged over 10 years is not less than 6.51 square metres;
• Floor area of any room in the HMO used as sleeping accommodation by two persons aged over 10 years is not less than 10.22 square metres;
• Floor area of any room in the HMO used as sleeping accommodation by one person aged under 10 years is not less than 4.64 square metres;
• Any room in the HMO with a floor area of less than 4.64 square metres cannot is not used as sleeping accommodation.

Housing Minister Heather Wheeler has said about the new measures:

“Everyone deserves a decent and safe place to live. But some tenants are being exploited by a minority of unscrupulous landlords who profit from renting out cramped and sometimes squalid or dangerous properties.”

“Today’s measures will mean landlords must provide adequate space for their tenants or face a hefty fine. It is part of a raft of new powers for councils to crack down on rogue landlords and comprehensive action we are taking to improve conditions for private tenants.”

With recent cases of tenants suffering health issues due to accommodation that does not meet relevant size or health & safety standards, local authorities under the proposed legislation would be able to set a deadline of up to 18 months for the situation to be rectified.

The Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018

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Rent Payment in advance – Which tax year?

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If rent is due monthly under the terms of an AST, but the tenant pays 6 months rent in advance then if the time period the advance rent covers straddles a tax year is the full rent recorded in the tax year it is actually received or is it applied pro-rata?

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Shape Shifting For Landlords In Scotland Is Becoming Increasingly Affordable

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The Scottish Association of Landlords recently reported that Kevin Stewart MSP has recently written to the chief secretary to the UK treasury to express concerns about the impact of the “section 24” tax change, which reduces landlords’ tax relief on mortgage/finance interest.

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How do you work out your deposit claim amount?

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Dilapidations:

It’s the end of a tenancy and the property has been damaged, so how do you arrive at a compensation figure that will be accepted by the tenant and deposit protection agency?

Do you know the industry formula used by letting agents & professional property managers to work out compensation?

There are influencing factors that must be taken into account when working out compensation and damages for dilapidations at the end of a tenancy. As a Landlord you can’t just charge a full replacement cost for each damaged item. This is then deemed to be “betterment” and could then cause a problem with your claim.

When working out a fair costing there are a few things that need to be considered, for example, replacement cost, original condition, original age, length of tenancy and so it goes on.

Oakley Jane inventory services has produced a dilapidation app which helps you to clearly demonstrate how you have arrived at the amounts being asked for. It does this by showing a full break-down of all the known factors.

Simple to use and quick to compile, the professional looking report can then be emailed directly to the tenant for them to read through.

There is an in-built handy dictionary with over 300 items showing life spans. A sliding bar can be adjusted to take into account varying qualities of such items, i.e. where the item was purchased, budget carpet, medium grade or high end etc.

This app is a guideline app, the figures can never be set in stone as so many different scenarios exist, but it’s better than just putting your finger in the air and guessing. It definitely gives you a flying start, a starting point for conversation with your tenants, and one that’s far more likely to be accepted when presented in a professional way!

Oakley Jane inventory services has been established for over 22 years, providing good quality professional inventories, check-ins, check-outs and property inspections.

Oakley is on the board of the AIIC, members of ARLA Propertymark & they work for the country’s leading letting agents.

Company Director, Amanda Kingham says:

“During 22 years of business operation we have come across many situations of unreasonable expectations from both tenants and landlords. We decided to take all of our industry knowledge and create this application to help explain what should be taken into consideration.

“We are passionate about our industry and believe dilapidations should not only be worked out fairly, but should also be consistent between one property manager to another, or from one Landlord to another.

“Landlords should not expect betterment, nor a tenant expecting no financial loss when damage has occurred and by using this tool, the influencing factors during a tenancy can be clearly shown.

“We have designed a ‘guideline’ app. The formulated calculations are based on replacement cost, recognised life span (there is a dictionary included with over 300 items) original age, original condition, length of tenancy, occupancy, level of damage and area of damage.”

We believe that this will help to educate Landlords, tenants and agents with some basic knowledge of how to work out fair compensation.

It should be noted that all scenarios will vary and that correct information must be inputted by the user and should be used only as a starting point.

Dilapidation App – Deposit Compensation Calculator

Dilapidation App – Calculator

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Lettingsupermarket.com™ Birmingham Landlord Offer

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Lettingsupermarket.com™ are proud to introduce their Birmingham lettings specialist Bradley Drew, director of their latest franchise, Lettingsupermarket.com™ Birmingham .

Bradley and his team, based in the city centre, will be providing Landlords with a personal experience and superb local knowledge to ensure that every aspect of property management is dealt with as efficiently as possible.

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