Peers in the House of Lords have raised concerns over how the Green Deal, which is due to come into force in two months, will affect both private landlords and their tenants. There are fears that it may introduce a two tier market, with some properties becoming very difficult to let or sell.
The problems could be a result of the way the Green Deal charges are going to work. Private landlords will able to get loans up-front to improve their properties, with tenants themselves repaying the loan via their utility bills. It is these higher bills that may become unacceptable to a tenant who may decide to leave as a result. It may also put off future occupiers of a property who will want to save money on utility bills, not spend more. Some private landlords are very concerned that they are going to be left with the bill for the improvements and no tenant to move into the property. They fear they will be massively out of pocket and looking for empty home insurance rather than landlord insurance. The House of Lords have asked the coalition to allow private landlords to repay the Green Deal charges directly themselves which will avoid any tenant resistance.
Lord Grantchester said: “The private rented sector is hard to engage with and the cost of improving these properties is likely to be greater than anticipated. Improvement works may be more problematic with 40% of housing having been built pre-1920 and 20% of tenants being assessed as living in fuel poverty. The whole edifice of the Green Deal looks precarious around these difficulties.”
From 2018, any property with an Energy Performance Certificate rating of below E will be banned from the rental market, and from the following year, tenants will have the legal right to demand energy efficiency improvements from their landlord. The RLA (Residential Landlords Association) are lobbying for landlords to be able to access Green Deal finance but repay the loan themselves.