Lettings agents’ body Propertymark says its proposal for tax incentives to be offered for landlords is one measure under consideration by the Welsh Parliament, known as the Senedd.
A statement from the trade body says the Senedd has listened to its suggestion for tax incentives for landlords to help decarbonise the private rented sector.
The UK government has consulted on a proposal for all new tenancies to meet an Energy Performance Certificate rating of C from April 1 2025 and existing tenancies by April 1 2028, but landlords and agents are still waiting on clarity on decarbonisation targets.
Now the Senedd’s Climate Change, Environment and Infrastructure Committee is weighing up a Propertymark idea to offer grants or interest free loans to landlords to help them decarbonise and to finance retrofit.
Other examples of incentives could be through the taxation system with possible reduced rates of the Welsh equivalent of stamp duty - known as Land Transaction Tax - or council tax rebates for both landlords and homeowners.
These ideas are amongst 29 recommendations made by the committee and now submitted to the Welsh Government.
Timothy Douglas, Propertymark’s head of policy and campaigns, says: “Propertymark supports the Welsh government’s aims of achieving net zero and moves to improve the energy efficiency of homes in Wales. A long-term housing decarbonisation strategy with cross-party support and realistic targets can help to achieve this.
“We’re really pleased to see that our proposals such as the availability of interest-free grants for landlords, requests for an agreed timetable and milestones for the sector, the production and inclusion of a clear decarbonisation strategy, alongside calls for the minister to provide clarity on how she will raise awareness have all been recommended to the Welsh government.
“We now urge the Welsh Government to act upon these recommendations and work with the UK government to introduce policies that allow landlords and homeowners to decarbonise their homes and properties in Wales.”
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I’ll be hoping they will offer an alternative example 0% loan towards the works. As I want to add EWI to my current portfolio but would struggle to finance it as have been hammered by CGT and similar.
Tax relief in the year of installation would be extremely helpful. If the government want net zero at some point they need to have a bit more joined up thinking. Straightforward tax relief would be far cheaper and easier to administer than most of the green grant schemes they've ever invented. From a net zero point of view does it matter who has this stuff? Rich, poor, tenant, homeowner?
Jo
As I have said before, I use self assessment to assess my tax liability according to my views, and I view anything like that as repairs, maintenance and replacement with modern equivalents - like double glazing, thicker insulation, condensing boiler etc.
I put details in the notes and have never been queried. The only queries I have had were in the early days when my mortgage interest nearly matched my gross rental income as I was aiming for capital growth and remortgaging opportunities then.
In my view, self assessment is exactly that and provided I am not lying or hiding anything, my conscience is clear on how I assess my tax liability, although I would ensure I had the available funds to pay any tax assessed if I were to be challenged. I don't believe any penalties would apply as the information is in the self assessment return in the notes.
HMRC is quite clear that adding insulation is a capital expense. DG & new boilers are replacements of existing items & so revenue. Robert - you can claim what you like but it doesn't change HMRCs policy!
Trivia
Until HMRC read my notes and challenge my assessment I shall continue to claim what I like and not worry about HMRC's policy.
In any case I am not adding insulation where there was none before, just replacing old inefficient and inadequate stuff, sometimes wet or damp, with its modern equivalent in exactly the same way as replacing old single glazing crittal windows and worn out (sometimes oil fired) boilers with modern upvc triple glazing and condensing gas boilers.
If HMRC wish to read my notes and challenge my self assessment then I will push back but then won't do anything further in making my rental properties more efficient until I have to or am incentivised to do so.
I'm sure Messrs Amazon and Alphabet (Google) will provide richer pickings for an alert HMRC bureaucrat, so that probably means I will be targeted tomorrow to set an example!
Propertymark moving into becoming a regulatory body. The carbon lifecycle is the human lifecycle. You cannot decarbonise the planet without killing everything.!!!
This is such a grey area, I only ever replace a boiler when it's faulty, so that has to be a repair, if I were to replace a working boiler to improve an EPC this could be a capital expense, if I have a rotten timber window and replace with a plastic window it's a repair, if not it's an improvement
It's when we get to the improving EPC score stuff it's really frustrating.
Things like internal or external insulation is incredibly expensive and classed as a capital improvement. Solid floor insulation is expensive, has minimal impact on heating bills and would require evicting tenants. So hugely expensive, impractical and no tax break.
Solar panels or heat pumps are capital improvements. But they are also depreciating items. The thing that really bugs me is that if commercial buildings installed solar panels this year they were treated as a super deduction at 130% and they could sell the electricity to their tenants. As PRS landlords we get nothing. Of all the EPC improvements solar panels are the one tenants really like. They can be installed in a day and tangibly cuts the tenants electric bill.
Saying we can offset these costs against CGT is nonsense. None of us know what future politicians will do to CGT allowances and some of us will die before we sell.
Jo
Unless tenants like the solar panels enough to pay a higher rent to recoup their net cost over 10 years or less, taking tax fully into account, I would not be providing them with a free means to reduce their energy bills.
Solid floor insulation is never cost justified in my opinion.
Robert
The beauty of solar panels used to be the Feed in Tariff. The fact it benefitted tenants was just the icing on the cake. The main point was that the owner of the panels was paid for every kWh the panels produced regardless of if it was used by the tenant or exported. That scheme ended in 2019 for new installations and now there is only an export tariff for any surplus generation exported to the grid. Things may be looking up when the new Octopus Flux tariff comes on stream for anyone with batteries.
The other time solar panels may be a no brainer is if you need a quick easy extra 10 points on your EPC. They cost a fraction of external insulation and installation only takes a day.
I agree with your strategy to get the better EPC more cost effectively than alternatives.
I take a fairly Neutral view on this debate. The 10 points would work for me. I have 6 with a ‘C’ but 10 points would lift another 3 so it’s doable for me. Don’t like gift wrapping traditional house with insulation and I think it’s far more efficient on internal of external walls which I have done on another when vacant very good. When it’s on the outside of the building you are heating the walls as well & the walls / lime mortar cannot breathe + I like my yellow stock brick work.
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