'Extend landlord Energy Saving Allowance' says property expert

Wednesday, 18, Feb 2009 04:29

A property author and landlord has called on the government to extend the energy saving allowance for landlords to cover the replacement of old boilers.

Property expert David Lawrenson, of www.lettingfocus.com, has said the extension of the allowance will encourage landlords to replace old boilers with new, more energy efficient and environmentally friendly ones.

Mr Lawrenson is an independent property expert and the author of Successful Property Letting - How to Make Money in Buy-to-Let.

He said: "The current tax regime in the UK is confusing and does little to encourage landlords to replace old boilers. Many landlords will keep an old boiler going for longer than might be best from an environmental point of view.

"Tax wise, most landlords letting furnished property have a choice. They can either opt to deduct ten per cent of the net rents as an annual wear and tear allowance or they can choose to wait for years until the item needs to be replaced to claim the alternative renewals deduction. Unsurprisingly, most go for the wear and tear allowance.

"What many landlords don't realise is that the 10 per cent deduction is given to cover the sort of assets that a tenant or owner-occupier would normally provide in unfurnished accommodation such as living room suites, fridges, cookers and washing machines.

"Non-moveable items like boilers don't seem to count under this definition and so a landlord letting furnished property and claiming the 10 per cent wear and tear deduction could replace an old boiler with a modern new efficient one and still claim the cost as a valid expense.

"But even here, the current rules are unclear because HMRC will not allow a deduction for the replacement of fixtures that constitute an improvement."

Helen Demuth, a tax expert at Smith & Williamson added: "HMRC did not used to allow a deduction for double glazed windows since they were an improvement on single glazed windows. They now allow double glazing as a deduction."

Mr Lawrenson added: "The current confusion means that when a landlord is faced with the cost of replacing an old boiler, he is more likely to try to keep it going than to replace it, especially as repair costs can also be claimed as a valid running cost. This is bad for the environment and bad for the UK's carbon footprint."