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Landlords to be hit with 'Green Tax'

Mike Wakeford

From April 2018 buy to let landlords will be hit with costs of up to £5,000 in order to comply with new government energy efficiency legislation, which will be introduced on rental properties.

Currently, around 330,000 rental properties in the UK fall into bands F and G on the energy efficiency rating scale. The proposed changes, which are being called 'Green Tax' will encourage landlords to make their properties kinder to the environment, by carrying out a range of upfront measures including making sure the correct insulation is fitted, cavity wall filling and fitting new boiler. The scheme is also aimed at encouraging landlords to keep their tenants bills from soaring. For example, having the correct insulation should result in less heating being required, with the new 'Green Tax' the government hopes to see a decrease in the average household bill of 11% by 2020.

These changes which have been proposed by the Department for Business, Energy and Industrial Strategy, mean that landlords will now have to pay upfront for property improvements. Until recently,  buy to let homeowners were able to apply for loans, tied to the Green Deal Scheme to help with meeting the costs.

What will landlords have to do?
Landlords will be required to improve their properties if they fall below an E on the energy efficiency ratings scale. It will be mostly older houses for example Edwardian or Victorian, that will be required to have work carried out on them, and it will be up to the landlords to foot the bill.

Will it REALLY be around £5,000?
It is only UP TO £5,000, the sum has been widely spoken about but this is due to the government putting a £5,000 spending cap on the cost to carry out these improvements. The reality is that the average amount of spending will be around £1,800.

Many have argued that the tax will also become unfair to tenants as it is felt that landlords will be forced to pass their additional costs onto tenants to foot the bill, by increasing rental charges.