New government advice on the Green Homes Grant

Government shares more detail on Green Homes Grant. Tax tip for landlords on incorporation. Understanding tenant's residency status set to be impossible without Home Office clarification.;
Energy Performance Certificate

The government has released further details on the Green Homes Grant, first announced by Rishi Sunak in the July 2020 Summer Statement.

Happily, the scheme is available to both homeowners and landlords.

In their latest update on the scheme, the government is urging tradespeople with relevant skills to register for “Trustmark” or "Microgeneration Certification Scheme" accreditation.

Landlords and homeowners, wishing to take advantage of the Green Homes Grant, should note that having appropriate accreditation will be a requirement of contractors used to undertake works.

Which improvements will the Green Homes Grant cover?

One or more of the following improvements to property will be eligible for consideration, under the Green Homes Grant scheme:

  • Solid wall, under-floor, cavity wall or roof insulation
  • Air source or ground source heat pump
  • Solar thermal

If the improvement plans include one or more of these measures, then further work can also be funded by the grant, to include:

  • Double or triple glazing/secondary glazing, when replacing single glazing
  • Upgrading to energy efficient doors
  • Hot water tank/appliance tank thermostats/heating controls

How much can be claimed under the Green Homes Grant scheme?

The Green Homes Grant vouchers are worth up to £5,000 to most homeowners and landlords.

Low income households may be eligible for grants of up to £10,000, which can be used to cover the entire cost of works.

The government has shared an example of the potential saving achievable through the scheme, as follows:

“For example, if a homeowner of a semi-detached or end-terrace installed cavity wall and floor insulation, costing around £4,000, the homeowner would pay just £1,320 – with the government paying £2,680.”

Aside from the benefit of the discount on the works, the government highlights that this could achieve a £200 annual saving on energy bills and cut 700kg of CO² from the carbon footprint of the home.

Find out more about the Green Homes Grant

In their press release, the government said that advice will be available via the Simple Energy Advice (SEA) website by the end of August.

You can speak to Simple Energy Advice advisors on 0800 444 202

However, at the time of writing, this phone line states that SEA advisors are unable to take applications for Green Homes Grants.

Instead, the message stipulates that the government will announce how to apply “in due course” and states that the scheme will be available from “the autumn”.

Other energy advice endorsed by the government is available via this website.

When will Green Homes Grant vouchers be available?

Under the Green Homes Grant scheme, successful applicants will be directed to approved tradespeople who are able to undertake the work. Once the work is approved, vouchers will be issued.

The vouchers will be available from the end of September.

Landlord tax tip

A tax accountancy firm has suggested that now may be a prime opportunity for landlords to incorporate their property portfolios – in light of the recently announced and temporary change to the stamp duty threshold.

When landlords incorporate their properties, the transfer from individual to limited company ownership is, in effect, a sale from one entity to the other. As such, the transaction is subject to stamp duty.

Property tax specialists, MJ Bushell, are suggesting that landlord plans to incorporate, can now take advantage of a potentially reduced stamp duty liability.

Any discount on stamp duty will depend on the value of the properties involved.

The reduction in stamp duty, announced by the Chancellor, Rishi Sunak, applies to properties valued at between £125,000 and £500,000.

Always take professional tax and investment advice

Where a mortgage broker can advise property investors on appropriate buy to let mortgage products, they cannot give financial or tax advice.

For this reason, it is essential that, if landlords are not clear on the implications of incorporating, appropriate professional advice is taken.

When to discuss buy to let mortgage rates

Understanding the difference between buy to let mortgage products when investing as an individual, versus investing via a limited company is a conversation that can happen at any point in the process.

Typically, limited company buy to let mortgage rates are higher than those available to individuals.

Furthermore, limited companies set up specifically for the purpose of investing in property ( a Special Purpose Vehicle or ‘SPV’) tend to have a wider range of buy to let mortgage products to choose from, than companies already trading in another sector.

Why might landlords consider incorporating?

In the 2015 Summer Budget, the then chancellor George Osborne announced that mortgage interest tax relief would gradually be withdrawn for landlords.

From 6th April 2020, mortgage interest tax relief, as-was, will be completely removed. In its place a flat 20%tax credit will apply.

It is this change in the tax rules that caused a large number of landlords to investigate switching their investments into a limited company structure – where mortgage interest tax relief still applies.

Some landlords left their existing landlords in personal names, but made future purchases through a limited company.

Calculating the financial pros and cons is clearly relatively complex, which is why professional tax advice may be essential.

Matt Warwick, of MJ Bushell, shared his comments on why his company are raising this issue with property investors:

“Although landlords buying additional properties still face a 3% SDLT surcharge on their property purchases, they are not required to pay the standard rate of SDLT on top for homes valued £500,000 or less.

“This also applies to the transfer of properties into a business, which would normally attract a substantial SDLT bill. In fact, the savings could mean they pay up to half as much.

“Before the SDLT holiday there had been a lot of debate about whether incorporation is the right approach to take and whether it saves sufficient money to merit the switch.”

Understanding tenant’s residency status

The Joint Council for the Welfare of Immigrants (JCWI) is tackling alleged secrecy, surrounding the EU Settlement Scheme. The JCWI has won in a complaint against the Home Office, who must publish more detail on the Scheme.

What is the EU Settlement Scheme?

The EU Settlement Scheme gives EU citizens the opportunity to apply to remain resident in the UK, after it leaves the European Union.

Landlords are amongst those responsible for ascertaining an individual’s right to live in the UK, prior to offering a tenancy, so will be amongst those required to enforce the EUSS.

Registration to the scheme is free. It opened on 30th March 2019 and closes on 30th June 2021.

What are the issues raised and how do they affect landlords?

The JCWI has strong concerns that people who have for many years, legally lived and worked in the UK, will be ineligible to remain under the rules, if they proceed as planned.

The fear is that, if this is the case, many people would be criminalised, and no longer be able to work, drive or receive benefits.

If the affected parties were tenants of a UK landlord, the landlord would be subject to fines for renting property to ineligible EU nationals.

Caitlin Boswell, Project Officer (EU Citizens) at the JCWI, highlighted the challenge she believes landlords will face:

“Between January next year and the EUSS cut-off point on 30th June 2021, landlords will somehow be expected to distinguish between EEA+ citizens who arrived before the end of 2020 and who are eligible for the scheme and those who came after, which will be near impossible.

“We are already hearing about EEA+ citizens wrongfully being denied access to accommodation and vital services because they cannot prove status through the scheme. This is only going to get worse after January”

The Home Office and the EUSS

The JCWI won their complaint to the Information Commissioner, against the Home Office.

As a result, the Home Office can either appeal against the result, within 28 days, or release a Policy Equality Statement within 35 days.

Despite the strength of feeling from the JCWI on the matter, the Home Office have said that:

“It has always been our intention to publish the Policy Equality Statement for the EU Settlement Scheme and that remains the case”.

It is clearly going to be essential for landlords to understand the residential status of their tenants, so hopefully greater clarification will be available in plenty of time.

Does eviction notice extension breach human rights?

The Welsh parliament’s own Legislation, Justice, and Constitution Committee (LJCC), has said in a report published on 3rd August, that the decision to extend the notice period for evictions to six-months, may risk breaching landlords human rights.

Originally, news of the extension came on July 23rd, via a cabinet statement from Julie James, Minister for Housing and Local Government.

Reaction from the NRLA

Ben Beadle, the chief executive of the National Residential Landlords Association, has since issued a strongly worded open letter to James:

“We remain very concerned about the haste of the announcement, the lack of consultation with stakeholders, and the failure to produce an impact assessment study, a view echoed by the Legislation, Justice, and Constitution Committee.”

Beadle goes on to highlight that the action could cause landlords to leave the Private Rental Sector (PRS), which will only worsen the situation for tenants.

Mr Beadle also addressed the financial situation of many landlords:

“The Welsh Government’s action appears to suggest the misplaced view that landlords are immune, or at least well insulated, from the far-reaching effects that Covid-19 has had. This fails to recognise that the majority of landlords are individuals who let out one or two properties, many of whom rely on that income for their day to day living expenses, to provide a pension, and to pay for care home fees.”

His words will likely resonate with many landlords, not just the Welsh. It appears to be a common misconception that the UK’s landlord population are all vastly wealthy individuals.

What Beadle highlights is that a large proportion of landlords do not conform to this picture and are simply unable to carry the cost of mortgage payments, whilst rent remains unpaid.

Mr Beadle’s letter can be read here.

Does the eviction notice extension breach a landlord’s human rights?

Within the document “SL(5)585 – The Coronavirus Act 2020 (Assured Tenancies and Assured Shorthold Tenancies, Extension of Notice Periods) (Amendment) (Wales) Regulations 2020” the LJCC raises three key questions.

  • Whilst it has been necessary to make urgent changes to legislation amidst the COvid-19 pandemic, was there enough justification to make this decision so hastily and in breach of the 21-day rule?

(Referring to the number of days that should pass between a decision of this type being laid before the Senedd and it subsequently coming into force).

  • Does the decision breach a landlord’s human rights?

Here, “Article 1 Protocol 1 of the European Convention on Human Rights (“A1P1”)” is quoted:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

“The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The point is made that the extension of the notice period ‘restrict[s] a landlord’s use and enjoyment of their property for an additional three months’, therefore can the Welsh government demonstrate that the forces compelling them to make this change were justified or not?

Specific mention is made of three factors, which appear at odds with the decision, namely:

  1. They [the Welsh Government] have had the power to put these measures in place since 25 March 2020, but did not do so when the incidence and spread of coronavirus was much higher;
  2. Other restrictions that were put in place to deal with the Coronavirus pandemic are being eased; and
  3. Restrictions are being lifted in the housing market allowing estate agents to open and for house viewings and house sales to take place, which seems at odds with the policy pursued in these Regulations?
  • Does the fact that the change was laid before the Senedd late in the day on the 23rd July, but came into force on the 24th July, further undermine the decision as being proportionate?

The full report can be read here.

Conservative support for landlords

Mark Isherwood, the shadow minister for Local Government and Housing for the Welsh Conservatives has joined the voices questioning the decision, in reaction to the letter written by the NRLA:

“Landlords – as well as tenants – have needs, and their voices and views must be heard to ensure the implementation of policy that is fair for all.

“However, the result could be landlords becoming increasingly insecure about the future, which would likely lead to serious repercussions for the sector with some of the hardest hit landlords removing their properties from the rental market.

“Ultimately, tenants would then lose access to good-quality accommodation, and so I call on the Minister to reconsider this policy.”

The Welsh Government has not yet responded to the report, but Welsh landlords will be glad to see that there is support for their position. Hopefully there will be good news on the horizon.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.