United Kingdom
April 2022
Rent Report

Landlords to save on green upgrades

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The government has removed VAT from energy-saving home upgrades and is offering new grants for green boiler replacements, making it cheaper for landlords to improve their properties’ EPC scores.

Green improvements including heat pumps, insulation and solar panels will now be VAT-free after the Spring Budget, a move that Chancellor Rishi Sunak said would save homeowners an average of £1,000 when installing solar electricity.

Energy efficiency is a hot issue for landlords, who are bracing for a mandatory minimum EPC rating of C for new tenancies from 2025 – although the government has not yet signed this target into law. Many are thinking of quitting the sector rather than spending potentially thousands of pounds on the necessary upgrades, and industry groups are calling for government support to help them foot the bill. 

This latest tax cut may not go far enough to unleash a wave of green investment. VAT on energy-saving materials was already just 5%. A study by mortgage brokers Habito found that upgrading a one-bedroom flat from EPC D to EPC C would cost up to £3,653, with bigger or less energy-efficient properties costing much more.

Landlords in England and Wales can also apply for grants through the new Boiler Upgrade Scheme, which offers £5,000 towards the cost of an air source heat pump or biomass boiler, or £6,000 for a ground source heat pump. 

However, the remaining cost to the homeowner is still likely to be high, especially if the property needs extra insulation or upgrades to pipework, and the multi-stage application process may slow down works. The National Residential Landlords Association has called on the government to provide grants for a more thorough, long-term national retrofitting programme to make homes more efficient.

Other housebuilding headlines

Growth in housebuilding activity slowed in March – Housing Today

Build to Rent part of solution to London’s housing crisis – Property Investor Today

Body set up to police UK housebuilding not representative, say critics – The Guardian

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