Free insulation on rental property
My latest round of tenant gripes has hit me after a relatively quiet period.
I suppose it was inevitable, and very much a case of when not if.
Tenants gripe – "I need to keep the heating on"
One of the tenants is complaining in a very nice and apologetic kind of way ( he is a social worker) that he was having to keep the heating on all the time just to keep the flat warm. Now this was during the latest cold snap where the temperature did plunge to -16 degrees. Correct me if I’m wrong that unless you were living in a Scandinavian ‘zero emitting eco lodge’ then there is every chance that you need to keep the heating on in the middle of winter when we are hit by plunging artic temperatures – I did!
My tenants suggestion was that perhaps the double glazing needed replacing, admittedly he did have a point as some of the glazing units had blown (so much for the wonders of lifetime UPVC windows). Well there was no way this was going to happen given the cost and the fact we are just about to hit the Spring.
His other suggestion was that perhaps the roof insulation needed upgrading. I made a tentative promise that I would have a look into this and as I headed off in my car the government initiative called the Landlord Energy Saving Allowance (LESA) popped ino my head above the voice of an overly chirpy Chris Evans. I thought that it warranted further investigation as I turned down the volume on Radio 2.
What is LESA?
LESA is a scheme for residential landlords and can be claimed by both an individual landlord, as well as corporate landlords whose rental business is registered as a company. Those properties under the governemnt rent a room scheme are excluded unfortunately.
What do I get?
The scheme does not involve a cash payments or loan as is the case with the governments forthcoming "Green Deal for landlords".
Instead the scheme potentially provides a landlord with a tax allowance of up to £1500 per year. A landlord can claim against the costs of buying and installing certain energy saving equipment, including additional insulation (good stuff I thought). Other items specifically included are: cavity wall insulation, draught proofing, hot water insulation, and floor insulation.
This allowance is now available for each individual property. If you decide to do the installation work yourself then you can still allow the costs of the material but can’t add in an imputed charge for your labour.
How does it work?
The tax allowance allows a landlord to make a deduction against the tax liabilities of their rental business. So for instance if I upgraded my tenants’ insulation which say cost me £500 then this would be added to the other allowable expenses of my rental business and would therefore reduce my overall rental profit and my income tax liability.
You need to act
Landlords need to act soon. LESA is being withdrawn after 1st April 2015.
Will I be taking advantage? I probably will….(if I get time to organise the work.) It will be good for me as for many other landlords in that it will maximize my deductions against rental income at a time when I’m making record rental profits. Of course the other benefit is it might just appease one of my tenants & keep them in situ for another Winter.
Am I going soft in my old age…..or is it a case of landlord pragmatism?
Please post your views and comments below.