Landlords need “urgent” tax reform to improve energy efficiency among rented housing.

This call comes from the National Residential Landlords Association as chancellor Rishi Sunak prepares his 3 March Budget, which will outline his plans for the UK’s pandemic recovery.

The move comes after MPs on the Environmental Audit Committee last week said the delivery of the government’s flagship Green Homes Grant scheme, introduced last September, has been “poor”.

The government has so far issued 21,000 grants of up to £10,000. The committee said at that rate it would take more than 10 years to meet the government’s target of issuing vouchers to 600,000 homes.

However, ministers have also proposed to increase the amount up to which landlords have to pay to make a property more energy efficient rises from £3,500 to £10,000.

The NRLA points out that according to the government’s own data, the average gross rental income for landlords is £15,000 per year.

The landlords’ body says “the impact of this change is likely to decimate the income of some landlords”.

The NRLA is calling on the chancellor to ensure that energy efficiency measures carried out by a landlord should be offset against tax at purchase, as repair and maintenance, rather than as an improvement at sale against capital gains tax.

It says this would address anomalies. Replacing a broken boiler is tax deductible, but replacing an energy-inefficient model for a more efficient boiler or heating system is not.

The association adds that over 32 per cent of properties in the private rented sector were built before 1919, which means landlords “face a huge challenge in making homes energy efficient when compared with any other housing sector”.

National Residential Landlords Association chief executive Ben Beadle says: “The rental market stands ready to play its part in securing a green recovery. However, to achieve this we need a tax system that properly supports and encourages the work needed to ensure rented homes as are energy efficient as possible on a long-term basis. The Green Homes Grant scheme proves that short term measures do not work”.

Beadle adds: “The chancellor needs to use tax more positively to encourage investment in energy improvements. This would play a crucial role in cutting bills for renters, reducing carbon emissions and improving the nation’s housing stock.”