Government green deal could give homes a warmer glow
THE Government’s Energy Bill, which includes a proposed Green Deal for householders, landlords and businesses, had it first reading in the House of Commons this week.
The Deal aims to fund energy efficiency improvements to property, without the burden of up-front costs.
So owners will be able to apply for Green Deal finance for insulation and other efficiency measures and the borrowings will be payable over a set time frame of up to 25 years.
The payments will be attached to the energy bill at the property, rather than to the individual.
So when you sell on the bricks and mortar you don’t take the debt with you. The obligation to pay will instead pass to the new occupier or bill payer.
The Government think that most people who expect to move again in the next 20 years or more are put off paying for energy efficiency improvements because they feel costs are only affordable by factoring in a long payback time. Passing on the cost to subsequent owners and occupiers, they say, will be a big incentive.
The Energy Bill will allow tenants to ask landlords for reasonable energy efficiency improvements and to get them from 2015 onwards. Local authorities will also have the power to insist that landlords improve the worst performing homes.
The Government says there will be limitations on how much finance can be attached to energy bills, to ensure that only improvements that are likely to pay for themselves over time are included.
It will also ensure that new owners and tenants are made aware of extra Green Deal payments on their energy bills when they take a property on.
After further consultation and a second reading, the Energy Bill is expected to be implemented towards the end of 2012.
A whole Green Deal industry could grow on the back of the proposed legislation and there are already calls for regulations to prevent cowboy installers taking advantage.
Campaigners are also calling for low interest rates for Green Deal packages.
The UK Green Building Council welcomed the proposed new legislation but said there were still major challenges to overcome.
Paul King, chief executive of the UK Green Building Council says: “This puts energy efficiency at the top of the agenda, which is a major achievement,
“Unfortunately, hoping that the Green Deal will simply catch on is very optimistic. It’s critical that the finance is provided at sufficiently low interest rates to make it attractive for consumers and to ensure they can access a range of technologies as part of their Green Deal package.
“Crucially, householders need to be given a clear signal that they will be expected to refurbish their home, either with fiscal incentives that link rates of stamp duty or council tax to the level of energy efficiency, or we may have to bite the bullet and say people won’t be able to rent or sell their home until it meets a minimum standard.”
The Government has suggested 14 million homes will take up the Green Deal by 2020, but Paul King says: “How will householders be incentivised to undertake low carbon refurbishment? Government has said that private rented sector landlords will have to upgrade their property over time, which is a very welcome step forward. However, similar drivers are needed in the owner-occupied stock. This could include stamp duty based on energy efficiency and the introduction of minimum energy efficiency standards at the point of sale. The Green Deal could also apply to non-residential buildings, but won’t be enough on its own. We need to introduce minimum standards of energy performance, based on a roll out of robust Display Energy Certificates (showing actual energy use in an A-G rating). If a property doesn’t meet the standard, it must be refurbished before being sold or rented.”