We all know that it’s essential that we move swiftly towards zero carbon emissions if we are to avoid a climate catastrophe.
Landlords collectively own some 20% of domestic properties. So it makes sense to target landlords and encourage them to improve the carbon footprint of their properties.
However, some of our tax and regulation rules work against this. They encourage the use of fossil fuels and discourage people, including landlords, from carrying out improvements to their property carbon footprint.
Here are four examples I have found:
The Government needs to urgently overhaul the software producing the EPC rating. At present, it favours gas boilers over electric heating – as the cost of energy is a major factor in the EPC rating produced.
However, landlords should be encouraged to move away from gas heating. Unless there is some way that gas can become ‘green’, as gas is a fossil fuel.
It is not impossible that gas could become a ‘green’ fuel.
For example, it has been suggested that it could be supplemented with green hydrogen. Dale Vince of Ecotricity has suggested that green gas can be created from grass.
However, at the moment it is definitely NOT green.
So favouring it above electrical heating particularly where landlords are using a green electricity supplier seems counterproductive.
VAT for fuel
The way that VAT is set up at the moment seems designed to encourage the use of fossil fuels and discourage the use of green technology! For example:
Electricity, gas, heating oil and solid fuel for domestic use are charged at 5%.
The only one of these which is capable of being carbon neutral just now is electricity.
Would it not be sensible therefore to have a lower rate for ‘green electricity’ to encourage its use? And for landlords to be encouraged to use green electricity services?
VAT for energy-saving materials
So far as energy-saving materials are concerned – things like heat pumps, insulation, solar panels and water and wind turbines – these are only eligible for the lower VAT rate if you are over 60. Or in receipt of any of the benefits listed in VAT Notice 708/6.
Which appears to exclude most of us. And will do little to encourage landlords to instal them in their properties to improve their carbon footprint.
If the government wants to encourage energy-saving materials – why don’t they just reduce the VAT for all of these items all the time? Rather than introduce complex rules which discourage their use?
VAT for Demolition v. retrofitting
I suspect that few landlords will be looking to demolish their properties to build something new. But if you are – the government is on your side.
New construction is zero-rated for VAT whereas VAT for retrofitting is not. Despite the fact that it is well known that far more carbon will be emitted for new construction than when retrofitting old properties.
Which is madness.
If we are to switch from petrol cars to electric, there need to be sufficient charging points. Where properties are suitable for onsite charging it would help if this could be tax-deductible when installed by landlords OR tenants.
And if any grant aid could be claimed by either landlords or tenants.
It would also help if the government could allow landlords (and also homeowners) to request street charging points – from lamp posts for instance. As street properties will have problems charging electric vehicles due to trailing cables.
Many landlords have street properties and no charging point will make properties less rentable.
There are no doubt other ways that government could speed up the takeup of green products and services by landlords other than just by targeting VAT and tax rates. We should all be encouraged through our tax system to use green energy and technology. And to improve the carbon footprint of our properties.
Landlords could easily do this, for example between lets when the property is empty.
However, at present, there seems to be little incentive for landlords to do this – in many cases quite the contrary!
Do YOU have any suggestions? Or any other instances of mad fossil fuel favouring taxes?
If so, please pop them in the comments below.
Many thanks to Dave Princep for his help with this post.