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EU Court Ruling Bans Discounts on Insulation Materials

June 9, 2015 | Landlord News  

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Thanks to the meddling of the European Court of Justice, landlords face paying thousands of pounds more to insulate their buy-to-let properties, after it was ruled that Britain’s tax relief scheme on energy saving measures contravened EU law.

EU judges say that Britain’s 5% rate of VAT on energy efficiency products can only be applied to social housing. All other housing tenures, private rented housing included, must be charged the full rate of 20%.

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Ironically, the government introduced the tax discount in order to meet EU emissions quotas. Making things worse, the EU is also now threatening multi-million pound fines to countries who fail to cut greenhouse gas emissions by one-fifth.

Another blow is the fact that government recently scrapped the Landlord Energy Savings Allowance, despite opposition from 20 groups representing tenants, landlords, and energy efficiency organisations.

According to government statistics, almost a third (32%) of private rented housing stock was built pre-1919. As a result, the cost of insulating private rented properties will hit Britain harder than most EU nations.

The RLA has called for urgent discussions with ministers to establish how the sector can be supported following this ruling.

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