Over 300k buy-to-let landlords to be hit with 'green tax' changes

Buy-to-let landlords with less energy efficient properties will soon have to fork out up to £5,000 due to changes to ‘green tax’ rules, it has emerged.

From 2018, loans will no longer be available for property improvements that boost energy efficiency, and it’s estimated that around 330,000 investors could be affected.

What is the ‘green tax’?

The green tax, or green levy, is made up of a series of government measures intended to improve the energy efficiency of properties in the UK and encourage environmental friendliness.

They’re also designed to save households money on ever-increasing fuel bills, and with everything from boiler regulations to strict rating systems, the government are predicting 11% savings for the average household by 2020.

How have the ‘green tax’ rules changed?

With the changes, proposed by the Department for Business, Energy and Industrial Strategy, landlords will now have to pay in advance for property improvements such as cavity wall filling, insulation and the fitting of more efficient boilers.

Previously, buy-to-let homeowners were able to apply for loans from the Green Deal scheme. It was then the tenants - benefiting from lower bills - who repaid the loans.

What will landlords have to do?

In a nutshell, landlords will have to improve their properties to meet at least a Band E energy efficiency rating.

Over 300,000 homes - mostly Victorian and Edwardian properties - currently in bands F and G will need major work, and it’ll be up to landlords to foot the bill.

How much will it cost to make properties more energy efficient?

But how much will this cost? Well, the positive news is that the government are proposing a £5,000 spending cap on improvements, and in reality estimate that most landlords won’t have to pay over £1,800.

Landlords may pass on these extra fees to tenants in the form of higher rents, says Richard Jones, policy advisor at the Residential Landlords Association.

Jones added: “Landlords have been harshly treated. This is an extra stealth tax on top of all the other measures that threaten the finances of the sector.”

With a number of buy-to-let changes in 2016 already, it remains to be seen how landlords will react to the latest legislation change.

What do you make of this latest change? Let us know in the comments below.

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