Everything You Need to Know About the New ‘Green Tax’

A controversial new measure, recently introduced by the Government, will see “hundreds of thousands” of buy-to-let homeowners needing to pay the so-called ‘Green Tax’ of up to £5,000, in a bid to make properties in the UK more energy efficient.

Essentially, the policy means that, from 2018, landlords will be required to pay upfront for environmental measures including new boilers, cavity wall filling and insulation, with the policy applying to the some 330,000 landlords who own homes that are deemed to be “less energy efficient” - often properties which were built in either the Victorian or Edwardian eras.

It had previously been the case that, after the landlord had applied for a loan from the ‘Green Deal’ scheme, tenants would eventually front the cost for such installations - enjoying the benefit of lower energy bills by way of recompense.

Many have criticised the move, claiming that it will in fact be tenants who are forced to bear the cost of installing energy-efficient measures in the property - coming in the form of higher rents, which landlords may have no option but to increase.

Others have pointed out the potential barrier the move may create to becoming a buy-to-let landlord, therefore possibly harming a thriving part of the UK’s economy.

Richard Jones, a policy adviser at the Residential Landlords Association, describes it as an “extra stealth tax on top of all the other measures that threaten the finances of the sector”, arguing that landlords “could struggle to find such a large amount of money upfront.”

The Government have, however, insisted that the much quoted £5,000 figure is merely a cap, with most landlords spending no more than £1,800 on new energy efficient measures.

A presentation from the new Department for Business, Energy and Industrial Strategy suggested that in order to find the funds to afford the ‘Green Tax’, landlords could borrow more; against the “significant amount of equity” which the 60% of privately rented properties are expected to have accumulated.

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Hans Nieuwkerk

Residential Manager