The Green Deal has launched
The ‘energy efficiency’ Green Deal was launched on Monday (28th January 2013). Ministers propose that the Green Deal will allow thousands of people across the UK to “stay warm for less”.
The scheme allows the consumer to take out a loan to spend on energy-saving improvements to their property. These can include better insulation, new boilers, draught proofing, double glazing and renewable energy technologies etc.
The main incentive – the consumer doesn’t need to pay the full costs for the improvements up front.
According to www.gov.uk, the scheme comprises 4, easy steps:
- Get an assessment of the property to see what improvements can be made
- Choose an Approved Green Deal provider
- Sign a Green Deal Plan. The provider will then arrange for the work to be completed.
- Once the work is complete, the loan is then paid back in installments through electricity bills
Sounds simple, but what are the costs?
- Consumers taking out Green Deal loans will repay them at a maximum rate of 6.92% (Department of Energy and Climate Change)
- On top of the loan, householders will have to pay a £63 set-up charge, and a £20 a year annual fee
- On a loan of £5,000, the overall rate that is repayable is just under 8% over 10 years, or 7.7% over 25 years
- There is no cap on the amount that can be borrowed, but the government expects that £10,000 will be the maximum amount that most people will apply for
- The government proposes that most improvements should reduce heating bills because the property would be using less electricity, gas or oil – the actual savings depend on the energy use and the future cost of energy.
£125 million cash back scheme
To encourage people to take advantage of the deal, the government has introduced a cash back incentive scheme whereby consumers can claim back money from the Government if they get involved.
This incentive is to run for a limited period only, with the Department of Energy and Climate Change earmarking £125m to pay out on a first-come, first-served basis.
How will the Green Deal affect landlords and tenants?
Although the Green Deal works best for owner-occupied property, tenanted properties will also be able to make use of the scheme. There are safeguards in place for both landlords and tenants to allow for this.
Tenants need to obtain the consent of anyone who may become liable to pay the electricity bills for the property before signing up to a Green Deal Plan. As the landlord may become liable to pay electricity bills if the property falls vacant, this means that landlord’s consent is required.
The reverse situation is equally applicable. Where a landlord wants to participate in the Green Deal and recovers electricity costs for common parts through a service charge, the landlord will need to obtain the consent of each tenant before signing up.
To find out more about the Green Deal, click here.