In our October 2021 “minimum EPC ratings, Rental Sector and Funding” blog we explored the current standards private rental Landlords must meet along with exemptions, funding, and the current Government’s plans to upgrade the minimum EPC rating.
Just a quick recap – since April 2020, the required minimum EPC rating of E has applied for all domestic private rented properties in England and Wales unless exempt. Landlords must self-fund upgrades up to a maximum of £3,500. Under the new proposals the Government aims to phase in raising the minimum EPC rating from E to C by 2025 for new tenancies and by 2028 for all tenancies. Also the upgrade spend cap will increase to £10,000.
The Chancellor’s Spring Statement 2022 announced the reduction in VAT on energy saving materials installed in residential properties from 5% to 0%. Landlords can take advantage of this for the next 5 years from the April 1st 2022. The zero rate falls in line with the 2028 expected “C rate for all” and with the Minimum Energy Performance of Buildings bill in its second reading stage at the House of Lord’s Landlords need to start considering what upgrades they might need to make to comply.
Energy-saving materials are defined in the Value Added Tax (Installation of Energy-Saving Materials) Order 2022; insulation for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings; draught stripping for windows and doors; central heating system controls (including thermostatic radiator valves); hot water system controls; solar panels; wind turbines; water turbines; ground source heat pumps; air source heat pumps; micro combined heat and power units; boilers designed to be fuelled solely by wood, straw or similar vegetal matter.
The VAT relief is in addition to the Government’s previously announced grants explored in our “minimum EPC ratings, Rental Sector and Funding” blog and part of their Heat and Buildings Strategy to “incentivise people to install low-carbon heating systems in a simple, fair and cheap way as they replace their old boilers over the coming decade.” You can read more about the Boiler Upgrade Scheme here.
2025 and 2028 may seem way off but Landlords need to carefully consider timing as well as funds. Can necessary upgrades be carried out with tenants in-situ or do you need a void period? Will it impact offering fixed term renewals? Should Buy to Let Landlords get ahead of the game and upgrade now? If you are an existing Landlord, or considering a buy to let, or appoint a new letting / managing agent speak to our Lettings Team on 01892 525 522
This article is intended as a guide only and does not constitute legal advice. It may vary in Scotland. Posted 4/4/2022
