Landlord Energy Saving Allowance (LESA)

landlord energy saving allowance

Landlord Energy Saving Allowance (LESA)

Landlords can reduce their tax bill by up to £1,500 a year with the Landlord Energy Saving Allowance (LESA). But you need to act fast as the tax perk on home improvements to help meet government green emissions target is being abolished. The tax break is due to end on 6th April 2015.

Currently landlords can claim £1,500 tax relief per property on works to boost energy efficiency levels, such as cavity wall and loft insulation, solid wall insulation, draught-proofing, hot water system insulation and floor insulation.

Energy efficiency within the private rented sector is widely accepted as being quite bad. The government seized upon a perfect opportunity to create the incentive of the Landlord Energy Saving Allowance (LESA) to introduce landlords to these key measures.

9.4% of private rented homes are F/G rated on the Energy Performance Certificate compared to 1.8% of housing association properties. A big part of the problem is that landlords have been reluctant to invest in energy efficiency when it’s their tenants that benefit from the resulting lower energy bills.

All rental properties from April 2018 must carry an energy rating higher than Band E, or are deemed illegal to let, so landlords have around three years to act on this.

Thus far only about 18,000 landlords have taken up the incentive; this is a number that has caused the government to review the position within the latest 2015 budget.

If the Landlord Energy Saving Allowance (LESA) is scrapped after the latest budget, we may find landlords rushing to the Green Deal to seek funding of up to £5,600 for energy efficiency improvements. As the costs for implementing these measures is paid for by the bill payer and outstanding debt remains with the property, this may well be the next best alternative for landlords to hit the government energy rating for their properties.

The green deal application process is quite chaotic and not as straightforward as you may think. With an expected surge in numbers of people applying to the green deal finance company for energy efficiency loans, we hope the government realise that by taking down incentives for the public they must prop up others to obtain the overall energy efficiency commitment.