The Green Deal – good for home owners or another flawed Government scheme?
We are over two months into the Government's Green Deal loan scheme. Is it an affordable way for householders to improve the energy efficiency of their homes and save money or will it be a bureaucratic white elephant?
The Green Deal is a government initiative to encourage home owners to install energy-saving measures in their homes. These loans are paid back through the savings made on your energy bills over a maximum of 25 years. The Green Deal loan is attached to your property so if you move before the loan has been paid off; it will pass on to the new owner or tenant.
The kind of works that can be carried out using the Green Deal are:
- Insulation
- Double glazing
- Heating systems
- Draught proofing
- Renewable energy
The scheme was launched in England and Wales on 28 January 2013 and the latest statistics appear to show that it is gathering speed. Since launch, 9,268 Green Deal assessments have taken place. Forty eight firms are now authorized as providers, 831 firms are registered as installers and over 1,000 people are registered to carry out assessments.
So what is involved in a Green Deal loan?
1. You get an assessment on your property from a Green Deal Assessor to see what improvements and savings could be made. There will be an upfront cost for this.
2. You choose a Green Deal Provider to carry out the work.
3. The Green Deal Provider will arrange for a Green Deal Installer to do the work.
4. Pay the loan off through your electricity bill.
Some Key Points
1. The scheme allows you to pay for some or all of the improvements over time on your electricity bill.
2. Repayments will be no more than what a typical household should save in energy costs. So if the savings are not enough to pay for the loan then you won’t be eligible for a loan.
3. The loan is linked to the property, not the person. So if the property is sold the new owner has to agree to take on the loan and continue paying for it through their electricity bill.
4. Once the work is complete an Energy Performance Certificate (EPC) will be produced and the Green Deal loan will be disclosed on the EPC.
5. In a property sale or rental, responsibility to disclose the presence of a Green Deal loan and to obtain acknowledgement rests with the seller or landlord. You can pass responsibility for disclosure on to an agent for example but you cannot pass liability on.
6. Landlords must get their tenants' permission before they sign up for a Green Deal and Tenants must get their landlords' permission.
7. The Green Deal interest rate will be around 6.96% with a set up charge of £63 and a £20 annual operating charge.
8. Solicitors representing clients in the transfer of property must be aware of the Green Deal. Sellers will need to include an acknowledgement in the contract.
9. The responsibility to disclose the Green Deal rests with the seller or landlord. Responsibility can be passed on but liability cannot.
Possible Issues?
1. Will the presence of a Green Deal loan on a property put off prospective purchasers?
2. You can only change electricity suppliers if the proposed new supplier is an authorized Green Deal provider. If not all energy suppliers sign up for the Green Deal will this limit your choice and your ability to get a better energy deal?
3. You are restricted to only using Green Deal authorized providers and installers. With a restricted number of firms allowed to carry out the work how will this affect the price of the installations?
4. You will be able to pay off the Green Deal loan early, for example if you sell the house, but there may be financial penalties for doing so.
It would be good to hear from anyone who has had a Green Deal assessment or is thinking of having one.
(Disclaimer: The contents of articles within this website are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We are not responsible for any loss resulting from acts or omissions taken in respect of content presented herein.)
