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Goodbye Landlords Energy Savings Allowance


Thursday, March 26, 2015

Landlords Energy Savings Allowance Scrapped

Landlords Energy Savings Allowance Scrapped in Budget

Landlords Energy Savings Allowance Scrapped in 2015 Spring Budget

The Chancellor of the Exchequer, George Osborne MP, unleashed a few controversial measures during last week’s pre-election 2015 spring budget, including an announcement that Landlords Energy Savings Allowance (LESA) will be scrapped at the end of March 2015.

Over the last few years, the Landlords Energy Savings Allowance (LESA) has enabled landlords with rental properties in the UK’s private rental sector (PRS), to offset up to £1500 (GBP) worth of energy efficiency improvements made to rental properties against income tax per rental property per year.

The spring budget announcement by the Chancellor reduces the number of options open to private rental sector landlords, with buy to let mortgages, to make good on energy efficiency improvements, some required by 2016 for the poorest energy rated rental properties.Such energy efficiency improvements cannot be claimed for on Landlords Buildings Insurance policies as they are not considered to be property repairs. Improvement works to raise the energy efficiency ratings of properties should raise the overall housing standards of properties in the private rental sector, allowing tenant’s greater choice over where they want to live.

Rental properties with an energy efficiency rating below “D” will require significant improvements such as new central heating systems, loft insulation and cavity wall insulation to bring them in line with the new Government legislation. However the scrapping of the Landlords Energy Savings Allowance scheme will mean that landlords will have to fund such energy efficiency improvement measures out of their own pockets.

Goodbye Landlords Energy Savings Allowance The alternative is to utilise the Government’s Green Deal scheme to finance energy efficiency improvements and increase rental prices so that tenants can fund the cost of the required works, but many UK PRS landlords don’t fully trust Government backed schemes despite all the promises made by politicians.

David Cox, Managing Director of the Association of Residential Letting Agents (ARLA), said: “We’re very disappointed that the Government has announced the Landlords Energy Savings Allowance will be scrapped. LESA allows up to £1,500 worth of energy efficiency improvements to be offset against income tax per rented property per year. With the introduction of minimum energy performance standards for the private rented sector in 2016, 2018 and 2020, ARLA believes that landlords should be able to choose whether to use the Green Deal, thus making tenants cover the costs of the improvements, or benefit from LESA if they decide to pay for improvements to their rental properties themselves. This is exactly why we’ve been campaigning for LESA to be extended, and increased to cover everything available under Green Deal finance. This is a regressive step by the Government that harms energy improvements and tenants and we hope that in the future, the Chancellor will reconsider this allowance.”

The Government announcement to scrap the Landlords Energy Savings Allowance has effectively removed the well intentioned measures that were designed to help landlords finance energy efficiency improvements in the private rental sector. Removal of this financial resource could result in a high number of landlords with buy to let mortgages leaving the private rental sector altogether, passing on the obligation for compliance to the potential property purchasers.


This was written by Mike Clarke. Posted on at 11:30 am. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.