Will it be Green Deal or No Deal for home owners?
The Government’s Green Deal aims to make properties more energy efficient but will homes end up less saleable? Sharon Dale reports.
THE Government’s Green Deal was launched with a fanfare but it has been followed by confusion and some concern.
The scheme offers householders a loan to pay for efficiency improvements to their property. The only upfront cost will be about £100 for an energy assessor who will identify what improvements could be made, and how much energy you could save as a result. Recommendations are likely to include swapping old boilers for new ones, installing double glazing, insulation and solar panels.
The maximum you can borrow is likely to be about £10,000 and the loan term can stretch to 25 years. Repayments will be attached to the property’s electricity bill.
While there have been concerns about interest rates of up to 10 per cent, the greatest worry is the saleability of a home saddled with debt.
The Green Deal loan is attached to the property’s electricity tariff until it is paid off, and if you sell your house the buyers will be forced to take on the repayments.
Victoria Lancaster, Renewable Energy Specialist at George F. White estate agency, says: “One of my biggest concerns is when a house owner decides to sell their property. The house may be more energy efficient but how does that balance out against a legacy of consistently high energy bills, due to the extra monthly payment and interest on the Green Deal agreement the seller has entered into?
“The crucial question is would buyers be put off when faced with paying back up to £10,000 in loans plus interest?”
The Government says its “golden rule” is that consumers should save more on fuel than they pay on the loan so they don’t lose out financially, and there are numerous examples of this on the Department for Energy and Climate Change (DECE) website.
One case study reveals if you take a loan for £900 for insulation, that saves you £159 a year on your heating bills, then repayments of £106 would be added to your electricity bill.
However that repayment is fixed and doesn’t take a change of circumstances and usage into account.
A family of four could take out the deal then sell their house to a couple who use less fuel. The new owners’ energy costs will fall, while the Green Deal payment added to the electricity bill will stay the same.
Richard Lloyd, Executive Director of Which?, has warned: “If a consumer’s circumstances change, the golden rule gets smashed out of the window.”
A spokesman for the DECE. says: “The Green Deal charge is set at the beginning and does not take into account a change in fuel usage.
“If you were worried that a situation like that could affect your house sale you might repay the loan early. However energy bills are predicted to rise so a house that is more energy efficient should be attractive.”
Patrick McCutcheon, of Dacre, Son and Hartley, agrees that buyers are attracted by energy efficient homes but adds: “The high levels of interest on the Green Deal loan are a concern and I worry about new buyers taking on previous owners’ liabilities.
“I think the scheme needs time to evolve and for understanding to build. Until it does it is hard to see it being picked up with great enthusiasm.”
The deal has caught the attention of some landlords, who see it as a chance to bring their buy-to-lets up to standard for free. It would help them comply with regulations set to come into force in 2018 that insist all rental properties achieve an E rating or above on their energy performance certificates.
Victoria Lancaster says: “Tenants must get the consent of their landlord prior to proceeding with a Green Deal but it is one way for properties to be made more energy efficient with the cost paid for by the bill payer.
“However, I’d say to anyone that borrowing money at relatively high interest rates based on advice from one Green Deal assessor may not be the best way to proceed.
“My advice would be to do some research yourself on what kind of efficiencies you could make in the house. Have you got at least 270mm of insulation in the loft? Have you draughtproofed every entrance? These are common sense, low- cost options that you can put in place easily and quickly. After that, it may be a question of looking at renewable energy, a new boiler or double glazing. Shop around, take advice and always get at least three quotes and see if you can fund the cost yourself. Only after you’ve exhausted all other routes would I suggest looking at the Green Deal.”
Information is available at www.gov.uk/greendeal or you can ask more detailed questions by calling the Energy Saving Advice Service helpline on 0300 123 1234.
The government is offering a cashback incentive for the first raft of homeowners who take advantage of the Green Deal. Some householders in older properties and those on benefits may qualify for extra financial assistance through the Energy Companies Obligation scheme.
DIVINE INTERVENTION: The Old Chapel has been sensitively converted and extended to create a stunning three-bedroom home with sensational features.Formerly the Bishop of Ripon’s private place of worship, it is grade two listed and boasts glorious stained glass windows and mosaics.
POWER SHIFT: The Green Deal provides loans for efficiency measures such as insulation and solar panels, but buyers will take on the debt.