With rising prices of energy and essentials set to see the majority of the UK tightening their belts, and the Office of Budgetary Responsibility (OBR) predicting the largest fall in living standards for more than seventy years, landlords face increased EPC requirements with little help coming from the spring budget.
With the country seemingly at the centre of several converging financial crises, there was a lot of expectation for Sunak’s spring statement to provide help for the nation to get through the latest in an ever-lengthening line of turbulent moments in global finance. As energy bills climb, and potential grain shortages caused by the war in Ukraine look likely to increase prices and exacerbate shortages caused by Brexit, the country really could have used a budget that alleviated some of the pressure. Sadly, it didn’t get it.
Cuts to VAT on green products, for example, will help a little; but, as landlords across the UK look to improve the energy efficiency of millions of properties to reach increased EPC requirements, there are still likely to be financial constraints on the ability of landlords to make those improvements – and further issues caused by availability.
The Director of Energy Efficiency Consultants Murton & Co, Jonathan Murton, for example, has stated that the rise in energy prices had already increased demand for products and added:
I suspect there will be frustrations though as we are already seeing orders not yet fulfilled due to increasing backlogs and lead times.
So, even for those landlords that can afford to make improvements, there may be more issues caused by the VAT rise than it solves.
In addition, many landlords that have already seen tenants accruing rent arrears (partially as a result of the pandemic and central government’s inaction when asked to provide grants to help with resulting financial problems – like many countries have done), are also facing a year and possibly multiple years where their tenants will face spiralling financial difficulties.
In this regard, the Chief Executive of the National Residential Landlords Association, Ben Beadle, stated:
More broadly, as renters, along with all others, face a cost-of-living crisis, the Chancellor should have reversed his decision to freeze housing benefit rates. Without this, those relying on the benefit will find it increasingly difficult to afford their rents.
At a time when the government is increasingly using the private rental sector as a sticking plaster on a crumbling social housing sector, there is a real problem developing that could see financial problems inflicted on welfare claimants by a real-terms cut to benefits cause cascading problems throughout society.
In what should be an eye-opening moment for the Chancellor, Generation Rent and the NRLA appear to be on the same side of this issue, as Baroness Alicia Kennedy, Director of Generation Rent, commented:
Responding to this week’s Spring Statement, Baroness Alicia Kennedy – director of Generation Rent – says:
We are in a dangerous moment with millions about to be plunged into fuel poverty and people already in poverty facing desperate choices between heating and eating.
When inflation is running at 7.4 per cent, the Chancellor should have targeted help towards those least able to manage, by raising benefits at the same rate and making sure Local Housing Allowance covers rising rents. The higher National Insurance threshold will help many private renters but not our most vulnerable neighbours.
Taking the National Insurance and income tax changes together, the Chancellor is stacking the economy against private renters who have to work for a living.
What this means for Wirral landlords
Unfortunately, there seems to be a growing demand for private landlords to solve the problems of central government. While they are asking for homes for Ukrainian families, which many landlords would love to offer, they are continuing to neglect the social housing sector, or the legislation impacting landlords making such a choice, meaning that landlords face the problem of choosing between struggling families from the UK and Ukraine while both are being failed by the state.
As things stand, there are positives for landlords, but there is a growing raft of issues that could cause problems – which landlords will need to address with their MPs before they become intractable.
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