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Energy Efficiency - is Sunak's VAT initiative enough for landlords?

Chancellor Rishi Sunak’s Spring Statement was something - but not enough.

That’s the view of Ben Beadle - chief executive of the National Residential Landlords Association - who says: “We welcome the decision to scrap VAT on energy efficiency measures. 

“However, it remains disappointing that the government has again failed to explain what will be required of the rental sector when it comes to energy improvements.  The sector needs clarity as a matter of urgency.

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“More broadly, as renters, along with all others, face a cost-of-living crisis, the Chancellor should have reversed his decision to freeze housing benefit rates. Without this, those relying on the benefit will find it increasingly difficult to afford their rents.”

And Elise Coole, managing director of specialist buy to let lender Keystone Property Finance, says Sunak should have done more on energy efficiency.

“We have been calling for more government support to help make the nation’s housing stock more energy efficient for years. Therefore, we welcome the Chancellor’s announcement today that he is removing VAT for the installation of energy saving materials such as solar panels and insulation.

“While it is a step in the right direction, we believe the government could – and should – be doing much more to help people shoulder the immense financial burden associated with making their homes greener.

“The Chancellor claims his plan will save the average person installing solar roof panels more than £1,000. But is that really much of an incentive when the average cost of installing solar panels is around £4,800?

“If the government is serious about nudging people into action it needs to provide more direct financial support, such as expanding the Boiler Upgrade Scheme so more people can take advantage of it.

“Ideally, this would be alongside the introduction of a replacement for the now defunct Green Homes Grant, which provided grants of up to £5,000 to those making energy saving improvements. If given the time and proper funding, this scheme could have flourished and become a real game changer.” 

If you missed the statement itself, Chancellor Sunak’s main measures were:

- basic rate of income tax to be cut to 19% in 2024;

- National Insurance increased to go ahead but thresholds increased by £3,000, rising from £9,600 to £12,570;

- homeowners with energy-saving materials like solar panels, heat pumps or insulation will pay zero VAT for the next five years;

- doubling current £500m Household Support Fund giving additional assistance for the poorest facing escalating energy bills;

- fuel duty will be cut by 5p a litre from 6pm, runs until March 2023;

- £50m for further crackdown on fraud, including a new Public Sector Fraud Authority; 

- tax rates on business investment will be reduced - not now, but in the Autumn Budget in late 2022;

- there will be an overall ‘tax plan’ for the next five years, with three objectives - help households with the cost of living, create conditions for growth, and introduce tax cuts before the end of this Parliament;

- a forecast that the UK economy will grow by 3.8 this year (dramatically down from previous expectation of 6.0 per cent), with projections for growth of 1.8 per cent in 2023, and then 2.1 per cent, 1.8 per cent and 1.7 per cent in the following three years.

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    When I installed solar panels 7 years ago the VAT was @ 5% and was £275 - not the £1000 quoted. If Rishi has raised VAT in the last 7 years and cut it again, is it really a cut?

    The extra VAT Rishi is raking in on higher prices on gas / electricity equates to approx £35 of the £700 increase under the cap.

    This is all smoke and mirrors and helps no-one. The rise in level at which you pay NI is the only measure that really helps anyone.

    I used to like Rishi, but I think he has shown just how little he understands the lives of real people.

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    The freezing of housing benefit is a big mistake too. The 3 bed rate in South Manchester for example is now 30% below market and that’s in areas dominated by local authority housing. I haven’t and don’t plan to raise any of my rents but how long is that sustainable? After all I will also be facing inflation and higher interest rates even if the government thinks we are some how so rich it doesn’t affect us. One things for certain if rent controls look more likely I’ll have no choice other than to up the rents to market rate because there’s no way I’m getting locked in to under market rent for the foreseeable future and that will doubtless lead to defaults and evictions.

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    None of it makes sense. Perhaps they think by freezing benefits then landlords will be forced to freeze rents? Many tenants who are eligible for benefits also won't be able to afford increased energy costs. If they set caps on rent then many landlords will increase their rents up to the cap level. It will only benefit the more well off renters who are in the more expensive rental properties. Landlords might then decide to sell those properties or convert to holiday lets / airBNB. None of these policies will have the desired effect of making rental properties more available or attractive. I guess they are so out of touch with the real world of ordinary people that they can't see any of these obvious things?

  • Elizabeth Ablett

    I have got the impression that our government do not understand what they are doing and the consequences of all their actions and measures. This is due to the low educational and intellectual levels. They do not understand economics and finance in full.

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    No Elizaberth, it's down to zero common sense, we can all see that with or without an education

     
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    I agree with Andrew.

    Many of our senior politicians and top civil servants have first class economics degrees but no normal life or work experience and zero common sense.

    PS. If Elizabeth is aiming her comments at the SNP "government" then I DO agree with her then!

     
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    in my opinion the government knows exactly what it is doing.But ueses sophistry to conceal it. its basically a shakedown of the PRS and handing it over to the Banks. Death by a thousand cuts often cuts disguised as some sort of benefit. VAT for the PRS should be scrapped because it is a Tax on the renter, however since they are an indirect tax then the government concelas its effaects, and monsters landlords.

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    Must get a new computer, key board bounces, sorry for the typos ! Cant afford it yet mainly due to a very bad tenant. (Nice Polish Lady!)

    Bill Wood

    If you're getting keyboard bounce, you either need a new keyboard (about £10 if it is a Windows machine) or the settings on the PC need adjusting (Keyboard Properties in the Control Panel).
    I'm sure a new PC will cure the problem, but isn't really necessary.

     
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