LANDLORDS SHOULD BE PREPARING NOW FOR NEW LEGISLATION COMMENCING NEXT YEAR ON ENERGY PERFORMANCE CERTIFICATES (EPC), ACCORDING TO ACCOUNTANTS. Since 2012, Energy Performance Certificates (EPCs) have been required by those letting residential properties. EPCs are used to highlight financial savings that could be gained by improving the energy performance of a property as well as giving tenants – and in particular a new tenant – an idea of the expense of heating that property. In some circumstances the rent has been reduced to compensate for poorly performing properties or, in extreme cases, properties with poor EPC ratings simply fail to let. For rented properties there is also a legal requirement for an EPC to be displayed. From next year however, the Energy Performance Certificate (EPC) system is to become much stricter. The updated legislation will allow tenants to be able to demand that their landlord carries out work recommended on an EPC and landlords must do so by law. From 2018 it will be illegal to let a property that has an EPC rating below Band E. SHIRLEY MATHIESON, AT SAFFERY CHAMPNESS WARNS: “Time is running out for landlords to carry out the measures recommended in the EPCs for their rental properties. 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. “Repairs to a let 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 meaning that the costs are “capital” in nature and hence no longer deductible as repairs. Under certain circumstances tax relief could still be claimed using capital allowances if the works meet certain criteria. “When planning works to improve the heat efficiency of their properties landlords should be aware of the potential tax consequences and take advice where necessary to ensure that they are claiming the maximum available relief.” LANDLORDS MAY BE ABLE TO GET HELP WITH ANY ADDITIONAL COSTS THEY MIGHT INCUR. She added: “The Green Deal can also help landlords to meet the costs of such improvements. These must be recommended by a Green Deal Advisor, and carried out by qualified Green Deal Installers. Costs can be met through a Green Deal loan for which the repayment levels are based on the energy savings made.”