At present, anyone letting residential property requires an EPC, which highlights the financial savings to be gained in improving the energy performance of the property as well as informing the tenant, with particular relevance to new tenants, an idea of the expense involved in heating the building. This has meant rent reductions in some cases where properties have been performing badly with others prevented from being let at all.
Another requirement is that an EPC valid for 10 years should be displayed prominently.
From 2016, a tenant will be able to demand the landlord carries out work on recommendations set by the EPC and it will be a legal requirement for the landlord to do so. From 2018, it will be illegal to let a property with an EPC rating below Band E.
"Time is running out for landlords to carry out the measures recommended in the EPCs for their rental properties" said Shirley Mathieson, of chartered accountants Saffery Champness. "They should not wait until either those improvements are demanded by a tenant or, by not making the recommended improvements, allow a property to become unlettable."
Ms Mathieson added that repairs to a property will normally be a deductible expense for tax purposes, however where the work carried out significantly enhances the property, this can change the tax treatment such that the costs are considered as 'capital' and thus no longer deductible as repairs.
If the works meet certain criteria, tax relief could still be claimed using capital allowances. Farmers and rural landlords should be eligible for help with additional costs they might incur and the government's 'Green Deal' scheme may also help, although this would have to be recommended by a green deal assessor and the works themselves would have to be carried out by qualified green deal installers.
Source: Herald Scotland