Landlords are set to benefit from potential Budget changes, claims Coventry Building Society.

The lender highlighted a minor but significant possible change that could encourage landlords to invest in upgrading their rental properties. The result? Higher quality homes for tenants, which could benefit both parties.

As things stand, landlords can only claim tax relief for repairs or like-for-like replacements of fixtures and fittings. When it comes to making actual upgrades to their properties, however, those improvements fall outside the scope of eligible tax relief.

This, according to Coventry Building Society, may be a key reason why landlords are hesitant to make meaningful improvements.

By offering incentives for property upgrades, landlords might be more inclined to enhance their homes, especially considering looming regulatory demands. In just a few years, by 2030, all rental properties will need to have an Energy Performance Certificate (EPC) rating of at least Band C.

The recent English Housing Survey paints a rather concerning picture, showing that a notable 21% of privately rented homes fall short of meeting the decent living standard, leaving room for much-needed upgrades.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, made his position clear: “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,” he continued.

“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."

He concluded by emphasizing the long-term impact: “It’s a small extension to a current rule which could have a big and lasting impact.”

In short, providing landlords with a financial nudge toward upgrading their properties could transform not only the rental market but also the quality of living for millions of tenants, while pushing forward the country’s environmental targets.