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Landlords delay repairs to furnished properties pending 'wear and tear' tax break

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Landlords delay repairs to furnished properties pending wear and tear tax break

Tenants may face longer waits for repair works to be completed to furnishings and fittings by their landlords as a consequence of new tax rules coming into force later this year.  A recent study has revealed that almost a third of landlords have indicated that any substantial repairs works which could cost them thousands of pounds will be put on hold until at least April 2016 when the new ‘wear and tear’ tax comes into force. 

At the moment, landlords who rent out properties on a furnished basis can claim tax relief on 10% of their rental profits even if they don’t actually carry out any repair works. This is soon to change and as of April 2016 they can only make a claim for the actual amount they have spent improving or putting the property in good working order.

A survey of 9,000 landlords by HW Fisher & Company revealed that 31% planned to spend less than £250.00 on repairs and maintenance up to the end of 2015. This is an increase of 17%. It was also revealed that 86% of landlords who let furnished property claim the wear and tear allowance even if they haven’t made any improvements to the property’s furnishings and fittings. As a result of the new tax break, many landlords are limiting their spending to only urgent works so they can take advantage of the tax break under the new allowance.

The proposals were announced in the budget of July 2015 and are expected to save the government around £205 million in 2017-18.

However, many landlords may forget that if they fail to maintain their properties to a safe standard they will be breaking the law. Issues such as structural damage, electrical works, ventilation, heating or water must be dealt with as soon as the problems arises by law. Tenants have the right to live in properties which are safe and are in fully functioning working order.

Dan Wilson Craw from a campaign group Generation Rent believes that this change could make landlords more attentive to their tenants’ requirements. He says that currently there is no incentive for landlords to carry out repairs but that under the new scheme, they will in effect be reimbursed for what they spend.

In the meantime, if tenants have problems with their landlord carrying out repairs, particularly in relation to the supply of gas, electricity and water they should contact the Environmental Health Officer at their local council office in the first instance.

If this has no effect, then public funding is still available for tenants to get legal advice if the repairs cause a serious risk of harm to the health and safety of the Tenant of their family members.