Green Deal
Launched in October 2012, the Green Deal is a new government scheme
aimed at delivering energy savings in an innovative and affordable way. The
idea is that householders (and other property owners) are effectively given
government finance upfront to make energy efficiency improvements.
In practice, Green Deal Providers, once an assessor has carried out an
assessment and let you know what energy cost savings can be achieved and
at what cost, if you agree, will carry out the necessary works at no upfront cost
to you, the consumer. The costs are then recouped by instalments through the
energy bill for the property.
The debt is attached to the property, rather than the homeowner, so if a
homeowner sells their property, then rather than the outstanding balance
becoming payable immediately, the instalments continue to be met by the
incoming purchaser through the energy bill. The eligible energy efficiency
measures are usually insulation, lighting and heating (including boiler
replacement).
There are several safeguards in place, the most important of which is the
so-called “Golden Rule” – that is that the expected financial savings must be
greater than the costs attached to the energy bill. Other safeguards include
approved measures, consent from the bill payer and compliance with the
Consumer Credit Act. However, it is not yet clear how the Golden Rule will
be policed, if you do not query the energy savings, or if the savings are not
achieved.
Owners will have an obligation to ensure that future bill payers acknowledge
in the contract for sale and purchase that they will be liable to pay the energy
bill for the property on moving in, and that they will presumably be unable to
switch utility providers. When purchasing a property you should ensure that
you check whether the seller has participated in the initiative as otherwise you
could face significantly higher utility bills than would normally be expected.
P7
Some utility providers are now offering various incentives, such as discounts on
new boilers to encourage homeowners to take part in the initiative. Whilst this
might seem like an attractive idea, and the aim to modernise Britain’s housing
stock with regard to energy efficiency is to be applauded, homeowners should
consider the matter very carefully before committing themselves, as it will
take some years until the cost of the improvements are paid off, and during
that time, whilst bills should in theory be reduced due to the improved energy
efficiency, this reduction will almost certainly be less than the repayment
instalments added to the bill.