A new funding scheme for energy-efficiency improvements has opened to landlords in England, but landlords will be forced not to raise rents during the EPC works.
The Warm Homes: Local Grant scheme, which opens this week, will allow landlords with properties rated EPC D to E to receive up to £30,000 for improvements on their first rental property and up to £15,000 for additional rental homes.
However, the grants are only available to tenants who are on low-incomes and only in certain postcodes.
The government says landlords with properties rated EPC F or G will need to show proof of an exemption to qualify for the grant, otherwise, they won’t get the funding. The government adds that they are focusing on improving the “energy performance and heating systems of low-income homes, where help is needed most”.
To apply, landlords need to meet three criteria:
- Eligible postcodes: These are based on deprivation factors – you can check out a full list here
- Benefit claimants: Tenants who are in receipt of certain benefits, including Universal Credit and housing benefit or who meet the existing ECO4 Flex Criteria.
- Low-income households: Households whose gross income is below £36,000 a year.
- The government says it will be up to councils to verify that applicants meet these criteria.
There’s no cap on the number of properties a landlord can apply for, but there is a maximum total payout. The upper limit is £315,000, which includes any previous grant funding received for upgrades.
A document by the Department for Energy Security and Net Zero, reveals landlords won’t be allowed to increase rent during the energy-efficiency improvements.
The documents says “should landlords be eligible for Warm Homes: Local Grant funding, there is an expectation that energy performance upgrades and/or low carbon heating improvements will not result in an increase to rental prices paid by tenants. The Authority will carry out monitoring of this and reserves the right to amend policy to adjust or remove support to landlords/the PRS should evidence of rent increases be detected. The Authority also reserves the right to make policy changes to PRS support, should there be any changes in the wider policy landscape.”
All landlords who apply will be added to a central database of those taking part in the Warm Homes: Local Grant scheme.
The National Residential Landlords Association (NRLA) has previously said they welcome the funding but believe support should also be available for landlords who don’t qualify for the scheme.
Meera Chindooroy, the NRLA’s deputy director for campaigns, said “the nature of the scheme means that huge swathes of landlords across the country will be, quite literally, left out in the cold. It’s also unclear if there will be enough to pay for improvements across the areas already selected to benefit. The PRS has some of the oldest, and hardest to improve, properties within the UK housing stock and what we would like to see is a comprehensive package of financial support available to landlords across the board.”
Landlords call for energy efficiency tax incentives
UK investors want the government to provide tax relief or financial incentives to encourage them to make their properties more energy efficient.
A quarter (25%) said this was on their wishlist, while two thirds (63%) of buy-to-let landlords were positive about the proposed changes to improve the energy performance ratings on rental properties.
Currently the Boiler Upgrade Scheme allows owners to get a £7,500 grant towards installing a heat pump.
Ryan Etchells, chief commercial officer at Together, said “that said, we have seen many amateur landlords decide to cut their losses and leave the market entirely, whilst many more are pivoting to the current climate. For example, we have seen many professional landlords looking to diversify their portfolios to spread the risk across residential classes as well as commercial sites. They are now turning to student accommodation, social housing holiday lets and mixed-use units to broaden income streams. In particular, we are seeing more houses being converted to houses of multiple occupancy (HMOs), as these can sometimes offer a better yield than a single residency.”
Half (44%) of buy-to-let landlords are concerned about Labour’s current plans and future policies for the buy-to-let sector, given what’s happened so far under the new government’s leadership.
Many are frustrated with Chancellor Rachel Reeves’ move to increase the stamp duty surcharge on second homes and investment properties from 3% to 5%.
Meanwhile the government allowed the stamp duty bands to revert back to previous levels, upping the financial burden for anyone wanting to buy a home.
A quarter (25%) want the government to prioritise tax relief or financial incentives for landlords investing in energy efficiency upgrades.
Etchells added “higher stamp duty may trigger some individual, private landlords to carefully consider how these costs will impact their property plans. The government must consider the knock-on effect this will have on providing good quality rental stock which is a vital component of the housing market. With affordability for first time buyers becoming ever more out of reach a growing number of the population rely on rental properties.
Constant attacks on the sector will only force landlords out of the market, reducing the number of properties available and forcing rent upwards, further impacting the ability to save for a deposit.”