Potential changes to the Budget could offer a boost for landlords, according to Coventry Building Society.
The society pointed out a small potential change that could incentivise landlords to upgrade their rental properties, ultimately providing better quality homes for tenants.
Currently, landlords can claim tax relief only for repairs and like-for-like replacements of fixtures and fittings, while upgrades to properties are not eligible for relief.
This situation arguably discourages improvements, according to the lender.
Incentivising property upgrades could motivate landlords to enhance their properties, helping them meet future Energy Performance Certificate (EPC) rating requirements.
By 2030, all rental properties will need an EPC rating of Band C or above.
Data from the most recent English Housing Survey revealed that 21% of privately rented homes did not meet the decent standard and require improvements.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Landlords are already clobbered with the 3% Stamp Duty surcharge when they buy a rental property, up to 24% on Capital Gains when they sell the property.
“Minimising the amount of tax they pay in the middle, while promoting better homes for tenants, could be a glimmer of good news in what’s warned to be a ‘painful’ Budget.
“Most landlords want a great relationship with their tenants and will want to give them better, more comfortable homes.
“The current tax set up doesn’t make it easy for landlords to upgrade their properties, yet in five years’ time all rental properties need to be EPC C or above.
“Giving landlords a carrot instead of a stick would boost the quality of the rental stock, give tenants a nicer-quality home, and help towards the broader goal of making the UK Carbon Zero by 2050.
“It’s a small extension to a current rule which could have a big and lasting impact.”
