European Court VAT ruling deals ‘blow to private rented housing’

Alan Ward
Alan Ward

Landlords are calling for urgent discussions with ministers following a ruling by the European Court of Justice that will make it more expensive to insulate private rented housing.

On Thursday, the Court ruled that the lower 5 per cent rate of VAT charged on energy efficiency products breached EU law and could only be applied where such products are used for social housing. All other housing tenures, including private rented housing, will be required to pay the upper 20 per cent VAT rate.

The announcement comes just months after the UK government scrapped the Landlord Energy Savings Allowance, which provided vital support to improving the energy efficiency of private rented housing. This was in the face of opposition from 20 groups representing landlords, tenants and energy efficiency organisations including the Existing Homes Alliance Scotland, the Scottish Association of Landlords and Scottish Land & Estates.

Government statistics show that 32 per cent of all private rented housing stock was built before 1919, making it some of the hardest to insulate of all housing. Just 24 per cent of homes in the sector have cavity wall insulation and only 25 per cent have 200mm or more of loft insulation (English Housing Survey Headline Report 2013-14).

The Residential Landlords Association (RLA), which represents private sector residential landlords in England and Wales, has written to the minister responsible for energy efficiency, Lord Bourne, seeking an urgent meeting to establish how best the sector can be supported to meet the unique energy efficiency challenges it faces.

Alan Ward, chairman of the Residential Landlords Association, said: “The RLA fully supports efforts to improve the energy efficiency of the country’s housing stock. The judgement of the European Court of Justice however jeopardises efforts to do so.

“Private rented housing faces some of the most difficult challenges in improving its energy efficiency given the age of the stock and needs greater not less support to meet the Government’s ambitions on home insulation.

“We are calling on ministers to give serious consideration about a way forward that supports landlords and tenants alike.”



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