Rural landlords 'should prepare' for stringent new legal measures

From 2012, an Energy Performance Certificate (EPC) has been required by anyone letting residential property.

An EPC will highlight financial savings that could be gained in improving the energy performance of a property as well as giving the tenant - and in particular a new tenant - an idea of the expense of heating that property. In some cases rents have been reduced to compensate for badly performing properties or, at most extreme, properties with poor EPC ratings simply fail to let.

For rented property there is also a legal requirement for an EPC certificate valid for 10 years to be displayed.

From 2016, the EPC system becomes much more stringent and, for example, a tenant will be able to demand that their landlord carries out work recommended on an EPC and the landlord must do so by law. Also, from 2018 it will be illegal to let a property that has an EPC rating below Band E.

Shirley Mathieson, Head of Renewables at UK top 20 Chartered Accountant Saffery Champness said: "Time is running out for landlords to carry out the measures recommended in the EPCs for their rental properties. They should not wait until either those improvements are demanded by a tenant or, by not making the recommended improvements, allow a property to become unlettable.


"Repairs to a let property will normally be a deductible expense for tax purposes, however where the work carried out significantly enhances the property this can change the tax treatment meaning that the costs are 'capital' in nature and hence no longer deductible as repairs.

"Under certain circumstances tax relief could still be claimed using capital allowances if the works meets certain criteria. When planning works to improve the heat efficiency of their properties landlords should be aware of the potential tax consequences and take advice where necessary to ensure that they are claiming the maximum available relief."

The Green Deal can also help landlords to meet the costs of such improvements. These must be recommended by a Green Deal assessor, and carried out by qualified Green Deal installers. Costs can then be met through a Green Deal loan for which the repayment levels are based on the energy savings made.

Both tenant and landlord have to agree to any Green Deal intervention, whether initiated by one or the other and, given the time it can take for a schedule of work to be agreed, set in process and complete, 2016 is very close. We would highly recommend that landlords talk to their tenants now if they have not already done so where such improvement works are required these can be done to bring their rented properties up to standard.

Also qualification for standard rate payments for the Feed-in Tariff for solar PV installations demands a property must be rated at Band D or above.