'Green' tax to hit property owners
London Telegraph | May 09, 2007
Buy-to-let investors will face a new "green tax" on their properties from next year, it emerged last night.
They will have to pay several hundred pounds for compulsory energy performance certificates, which are already a key component of the controversial Home Information Packs.
Around 850,000 people own buy-to-let properties, many of which have been bought to augment their pensions. They have already been hit with extra red tape this year with a scheme that requires them to give their tenants' deposits to a third party for safekeeping.
Experts said last night that buy-to-let landlords would be forced to employ qualified energy inspectors to give their properties an energy rating between A and G.
The certificates would likely cost around £200 and could require renewal as often as every three years, adding considerably to the financial and administrative burden of renting out a property.
The Government confirmed last night that it was extending the energy certification scheme to rental property in October next year. However, no regulations or guidelines for landlords have been produced.
"We are working in the dark a bit," said Simon Gordon, the head of public affairs for the National Landlords Association.
Michael Gove, the shadow housing minister, said that the lack of regulation was typical of the Government's attitude towards the certificates and their inclusion in Home Information Packs, known as HIPs.
"They are operating on a wing and a prayer," he said. "The fact that there are no regulations surrounding the extension of HIPs into the rental sector only served to demonstrate the way in which the whole thing has been botched."
Home Information Packs become compulsory for any house put on the market after June 1. However, they have been widely criticised due to fears that there would not be enough qualified inspectors to carry out energy inspections and that they would not speed up the house-buying process.
Homeowners are already beginning to put properties on the market in order to avoid the cost of Home Information Packs before the deadline. The packs could cost up to £600, once the cost of the energy certificate, legal searches and other documents is included.
The Conservative Party has tabled a motion in the House of Commons to scrap the packs and this last-ditch attempt to throw out the law will be put to the vote on May 16.
The Government has been criticised by the House of Lords for including energy certificates in the Home Information Packs. Under European law, energy inspections are required every 10 years, but they will be carried out far more frequently in the UK because of their inclusion in the packs.
A Government spokesman said that it was looking at energy certificates on rental property also being carried out more frequently than every 10 years, because it believed that this would make rental homes more energy efficient.
However, one expert said that he did not understand what a landlord's incentive would be to implement energy efficient measures.
"The landlord does not pay the heating bills in most homes he rents out," he said.
The Association of Home Information Pack Providers (AHIPP), which trains energy inspectors, said that it was talking to the Government about renewing the certificates on rental properties every three years.
Mike Ockenden, the director general of AHIPP, said that it was also lobbying to bring forward the October 2008 deadline for certificates on rental properties on the basis that there would be enough qualified inspectors to carry out the checks.
Forcing landlords to obtain green certificates places a further obstacle in the way of Britain's growing army of buy-to-let landlords. Ten per cent of all mortgages taken on last year were for buy-to-let purposes.
Mr Gordon, at the NLA, said that while it was making its members aware of the move towards energy certificates in the rental sector, other, smaller, landlords, might not be aware of the changes.
He added that those who would be most affected by getting a poor energy rating would be investors who had bought Victorian or Edwardian period homes rather than modern flats in blocks that were better-insulated and had more modern boilers.
The number of buy-to-let mortgages has soared in the past decade and a recent report suggested that the upward trend was set to continue.
Mintel, the market research organisation, said that the number of buy-to-let home owners could double in the next three years to about two million.
It said that the trend would be driven by continued growth of the population and the demand for rented accommodation.
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