Thursday 29 October 2020

When NOT to improve your property's energy efficiency!

There's a rule for everything, but as most entrepreneurs, I skirt around these (legally of course) to get the most out of things. An intended consequence of the governments energy efficiency drive (in particular to outlaw letting of properties that are rated F and below) was to get landlords to sell up. 

A number of landlords will have thrown in the towel upon hearing that their property can't be brought up to an E rating, and joined those who are sick of the red tape, regulation and taxation surrounding buy-to-let. Fear not, for those die-hard buy to letters like myself there is a way around having to improve your property.

The government has left the door open a crack, for those who are savvy enough to know about these things. Of course these exemptions are buried in the small print. Let's discuss when and how... There's 7 ways to get around having to improve your property you know! 

  1. High cost exemption - The regulations deem it to be unreasonable to have to spend more than £3500 to bring your property up to an E rating. If the cheapest improvement will cost in excess of this you can apply for a "high cost exemption." If one or more bits can be improved for £3,500 or less, and these still fail to improve the property to EPC E, then the ‘All Improvements Made’ exemption should be registered (see number 2). This is for residential properties only.

  2. 7 year payback exemption - irrelevant to residential buy to let but perhaps of interest if you do have commercial property - in a nutshell, if the cost of the energy saving measure will not pay itself back in 7 years.

  3. All improvements made exemption - quite simply, there is nothing more that you can do to improve a property's energy efficiency; applies to both residential and commercial properties.

  4. Wall insulation exemption - where the recommended course of action is to apply wall insulation but the measure is not appropriate for the property, as deemed by expert advice. The advice (by a suitable expert such as a chartered engineer or building surveyor) indicating that due to its potential negative impact on the fabric or structure of the property (or the building of which the property forms a part) would secure this exemption; applies to both residential and commercial units.

  5. Consent exemption - the landlord may in fact be reliant on permissions to install things such as solar panels, insulation and so forth. Where the necessary consents cannot be obtained, for example planning permission is required, the property is in a conservation area, or perhaps freeholder consent is required a landlord may apply for an exemption.

  6. Devaluation exemption - this is of importance for historic buildings and the such - you would be eligible for such an exemption if the value of the property were to decrease by a minimum of 5% after installing energy improvements. Applies to both.

  7. New landlord exemption - whereby the property is newly acquired and there simply has not been ample time to implement any energy saving measures. This is typically in the first 6 months of becoming the landlord, after which the exemption expires. Applies to both residential and commercial properties.

So there you have it, 7 completely legal ways to avoid having to upgrade your rental property. So cancel the sale if you were planning on bailing, there are plenty of ways to keep carrying on (profitably) with buy-to-let! As always I'm happy to help you so do reach out via email. I love to help other investors old and new find their way in the myriad of strategies that are available. Are you looking for coaching, mentoring or simply after a sourced deal? Do check out my personal website to choose a package for you! Don't forget to check out my YouTube channel for more useful information on all things buy-to-let and don't forget to subscribe!

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