Inefficient Boiler Causing Large Bills ?

[Blewyn]

Hi, I'm not a plumber so I hope you will forgive me for asking some n00b advice in this forum. I think my lettings agent is fishing for commission - he's saying that my existing boiler (a Baxi Bermuda 552 gas fire and boiler) is 'inefficient' and causing high bills.

Is this possible ? For a device that burns gas to heat water to be 'inefficient', wouldn't there have to be a leak somewhere ? If gas is being used up, it must be being burned or lost to the atmosphere. If it is being burned, it must be generating heat......so unless there's a leak how could a boiler be working at 50% say, as my agent is implying ?

 

[Dotty]

Take to long to explain why. But he's probably right with the efficiency on that appliance.

If you're the landlord you could get another gsr in to check. One that'll tell you the truth, not what you want to hear.

If you're the tenant it looks like you're getting a new boiler!

 

[kay-jay]

it will be inefficient cos its old. modern boilers are much more efficient ie they burn less gas to impart the same amount of heat energy into the water.

if youre the landlord, why would you care about the bills? surely its the tenant that pays......plus if your tenant is a tramp you could qualify for a free boiler through them.
if you are the tenant. keep complaining about bills and threaten to move out.

 

[Ray Stafford]

There are three factors affecting efficiency:

Appliance design
System design
System condition

On the day it left the factory, that boiler was probably about 75% efficient. The other 25% of the heat you pay for goes (literally) up the chimney. A modern boiler will be around 90% efficient.

We can't see the system so its hard to comment, but typically, systems of the age of that boiler were optimised for cheapness/ease of installation and limited by the technology available at the time. I would be surprised if some simple upgrades to the system design and controls didn't improve efficiency by 10% or more.

Finally, the system will have degraded over time as the pipe work sludged up, partial blockages form at various choke points, and maybe even some control elements have stopped working or don't work as well as they did. Either flushing the existing pipework or (better) renewing rads, pipework and valves will gain efficiency.

Think of it like a car.

Old car, running lots of stop-start trips on flat tyres vs modern car doing a steady motorway run on good tyres. You may burn the same gallon of petrol, but you will get more miles in the second case.

Of course, that doesn't mean that your letting agent ISN'T after his commission. Its possible to be right and greedy at the same time.

 

[Blewyn]

Finally, the system will have degraded over time as the pipe work sludged up, partial blockages form at various choke points, and maybe even some control elements have stopped working or don't work as well as they did. Either flushing the existing pipework or (better) renewing rads, pipework and valves will gain efficiency.

I'm the landlord. My tenant is complaining about high bills (£300 in a month, he claims) and a plumber has been round and got him all wound up by saying the boiler needs replacing. So of course now the high bills are all the result of the boiler, not the tenant keeping the heating on all winter. Still, I'll have another plumber (the guy who fixed the boiler in the past) go round and make sure all rads are cleaned and bled etc.

How much is a new boiler ?

 

[Chalked]

It's probably the least efficient boiler/fire combination out there. I bet for every £ spent, there will be 45p wasted. This is because the boiler does not scrub enough heat off the open flame before it flys up the flue ( chimney) also because this is an open flue appliance there will be a air vent built into the wall to feed the boiler with fresh air. This is needed, but causes a draught of cold air which then makes the house loose even more heat.
a new condensing boiler would definitely save money, but not for you. You probably have there, a very reliable boiler.
You don't legally have to replace unless it is unsafe, but you may start losing tennants if you don't!

 

[albatross]

Read this:

[DLMURL="http://www.thegreendealhub.co.uk/uk-landlords/"]Green Deal Landlords | ECO Funding | Free Grants | The Green Deal Hub[/DLMURL]

By 2016/18 you may be forced to fit a new boiler anyway.

 

[Blewyn]

It's probably the least efficient boiler/fire combination out there. I bet for every £ spent, there will be 45p wasted. This is because the boiler does not scrub enough heat off the open flame before it flys up the flue ( chimney) also because this is an open flue appliance there will be a air vent built into the wall to feed the boiler with fresh air. This is needed, but causes a draught of cold air which then makes the house loose even more heat.
a new condensing boiler would definitely save money, but not for you. You probably have there, a very reliable boiler.
You don't legally have to replace unless it is unsafe, but you may start losing tennants if you don't!

So can I replace the boiler without replacing the fire ? Or do both have to be replaced at the same time ? Any idea of cost ?

 

[chris watkins]

Just read that document interesting until I got to this bit & then fell about laughing !!!

"tenants will be able to demand reasonable energy efficiency improvements from their landlords. If these requests are refused local authorities will be able to compel landlords to undertake the improvements."

Local authorities can't even enforce Part L or G (or for that matter all of the Building Regulations) let alone take this & the Landlords on. What tenant is going to chance upsetting the LL & risk loosing the property.

What a Joke !!!! Its all just words now, actions left politics a good while ago.

 

[albatross]

So can I replace the boiler without replacing the fire ? Or do both have to be replaced at the same time ? Any idea of cost ?

You will have to do both
Get several quotes form local guys.
Expect to put a boiler on the wall somewhere and do something else with the fireplace.
You will need thermostatic radiator valves on most radiators.
Your hot water cylinder may not be suitable and may need changing or it a combi.
You will need a room thermostat/timer if there isn't any.
System will need flushing.
I can't see it but expect £3-5k Don't go for the cheapest. You will have to do it all again.

Also look into loft and cavity wall insulation.

 

[albatross]

Just read that document interesting until I got to this bit & then fell about laughing !!!

"tenants will be able to demand reasonable energy efficiency improvements from their landlords. If these requests are refused local authorities will be able to compel landlords to undertake the improvements."

Local authorities can't even enforce Part L or G (or for that matter all of the Building Regulations) let alone take this & the Landlords on. What tenant is going to chance upsetting the LL & risk loosing the property.

What a Joke !!!! Its all just words now, actions left politics a good while ago.

I agree but I bet it gets enforced by estate agents/tenants. Agents won't take houses on their books unless they have a new boiler and tenant will only want to rent ones with a new boiler.

 

[lame plumber]

more tenants than properties out there

 

[Ermintrude]

5k fine soon to be in place for each inefficient boiler in rental - was supposed to be by 2015 think it's now April 2018, due to poor start to green steal!

 

[jtsplumbing]

What the hell is the landlord complaining about, if it needs replacing the cost comes of his tax bill ! so at the end of the day it costs him nothing,

 

[Ray Stafford]

What the hell is the landlord complaining about, if it needs replacing the cost comes of his tax bill ! so at the end of the day it costs him nothing,

If his tax rate is 25% and the job costs £4k, the tax deduction will reduce the effective cost to £3k, but not to £zero. Even if he is a super high rate taxpayer (45%) then it still only reduces the bill by less than half. To reduce the cost to £0 you would need to be on a tax rate of 100%.

 

[kirkgas]

Ray Stafford, surely the £4k comes right off annual income as an expense before any tax is calculated? Meaning he doesn't pay anything for the boiler renewal just less tax, when I do any repairs to any of our properties I send the invoice to the accountant as an expense that's why my sons accountant told my son to buy a "large asset" rather than pay it in tax

 

[Ermintrude]

Yes but expenses are still expenses, all this means is you have a lower tax liability. If I'm wrong and hmrc pay for all your expenses,...... Ray can you please dispatch 10000 of every stock line you have and every special you know of. Please post individually as then I make you lots of money in post, and as consumables are an expense you win too!

 

[Ray Stafford]

Ray Stafford, surely the £4k comes right off annual income as an expense before any tax is calculated? Meaning he doesn't pay anything for the boiler renewal just less tax, when I do any repairs to any of our properties I send the invoice to the accountant as an expense that's why my sons accountant told my son to buy a "large asset" rather than pay it in tax

Work through an example.

Lets say that this theoretical landlord has letting income of £30,000 and other legitimate tax deductible expenses of £10,000 and that he pays tax at 25%, and that the boiler swap and associated work would cost £4,000. It doesn't really matter whether these figures are perfect - this is just an example.

Scenario 1: If he doesn't change the boiler, his annual accounts show taxable profits of £30,000 minus £10,000 = £20,000 profit - so he sends a £5,000 cheque to the tax man, and pockets £15,000 for himself.


Scenario 2: If he does change the boiler at a cost of £4,000, his tax deductible expenses are now £14,000. His accounts show a profit of £30,000 minus £14,000 = £16,000 profit. 25% of £16,000 is £4000, so thats the cheque he sends to HMRC and he takes home £12,000.

The difference between the two scenarios is that he has £3,000 less in his pocket and the taxman has £1,000 less to pay for public services. However, the taxman will probably get his £1,000 back and more, because of the additional taxes that the boiler manufacturer, merchant and installer will pay as a consequence of this extra installation.

The other main beneficiary is the tenant, who enjoys lower fuel bills. The landlord MIGHT gain through lower system maintenance bills, but thats far from certain - 552s are pretty robust.

Acquiring an asset is a slightly different kettle of fish, and the tax treatment is more complex, depending on what the asset is. But replacing an existing boiler in a let property is normally an expense, not the acquisition of an asset.

 

[chris watkins]

Acquiring an asset is a slightly different kettle of fish, and the tax treatment is more complex, depending on what the asset is. But replacing an existing boiler in a let property is normally an expense, not the acquisition of an asset.

Nice one Ray, well explained.
Just one quick question if I may, so how many fish & kettle should I buy to be able to claim them as an asset ? :Angel_anim:

An asset would be buying something for the business like a jetting machine / other plant items or an office, yard or lock-up etc.

 

[Ray Stafford]

An asset would be buying something for the business like a jetting machine / other plant items or an office, yard or lock-up etc.

Assets come in two main flavours. Current assets include cash, stock for re-sale, consumables and the debts that your customers owe you. One expects the current asset position to vary rapidly during the course of trading.

Fixed assets are, as they sound, more long-lived. They aren't necessarily fixed in the sense of "screwed down" - but they don't normally change on a day to day basis.

Depending on the type of business, a specific item may fall into a different asset category. For example, for most of us, a van is a fixed asset. But for a second hand commercial vehicle dealer, the vans on his forecourt are current assets.

Merely acquiring and disposing of assets does not lead to a tax liability or reduction on its own.

For example, if I spend £100 on copper tube, I have converted one sort of current asset ( £100 cash) to another sort (£100 stock). If I were to sell it to you on account for the same price that I paid for it, I would have reduced my stock, but increased my debtors by £100 (another class of current asset). Finally, if you paid your bill, the debt would be converted back to £100 cash and I would be back where I started. (and in sore need of a business studies course).

However, if I charge you £120, then at the end of the cycle I have an additional £20 on my balance sheet. (The gross profit) It is this which will form the basis of any tax charge, once the expenses of selling it are accounted for.

The taxman has a variety of ways of encouraging and discouraging the acquisition of differing types of fixed assets. For example, the acquistion of high end residential property by companies attracts a punitive tax - to prevent business men from buying posh houses through their businesses, and thus potentially dodging income tax. On the other hand, if you acquire manufacturing machinery, there is a fair chance that your accountant can get some attractive tax allowance under one of the schemes, because the government want to encourage manufacturing.

However, I know of no circumstances when the tax man pays for 100% of any business cost. Usually the maximum benefit is at most equivalent to the cost of the expense x the marginal rate of tax.

 

[jtsplumbing]

But replacing the boiler wont be an asset ! it would be a expense for repairs to his property, so would be fully deductible, same as spending out for repairs to your van, replace tyres = expense, not an asset

 

[Ray Stafford]

But replacing the boiler wont be an asset ! it would be a expense for repairs to his property, so would be fully deductible, same as spending out for repairs to your van, replace tyres = expense, not an asset

I think you may have missed my post #18

 

[Chalked]

The install would have the effect of making the house worth a little more and easier to sell.

 

[AWheating]

back boilers are more efficient then a modern combi, it will still be working in 5 years

 

[Ermintrude]

back boilers are more efficient then a modern combi, it will still be working in 5 years

Your calculations are way off.
Simi , ravencheap or isar. Very efficient on gas. After first year it's guaranteed that they will save you. 99% on gas consumption ( no gas used when broken)
But the 125 call outs and 125 cheques receipts and ID notices will soon reduice any savings on gas as you say