The government’s Green Deal scheme, designed to reduce household energy use, is beginning to take shape. From last week, potential Green Deal installers were able to start the process of becoming authorised, ahead of the scheme’s official launch early in 2013. The Green Deal is designed to provide homeowners with finance for energy saving modifications that will help the UK meet its carbon emissions reductions targets, paid back via energy bills. Loans will be available to both landlords and owner-occupiers.
How will it work?
Households can claim loans of up to £6,500 towards improvements on their home for energy-saving modifications such as improved insulation or a more energy-efficient boiler. Loans are linked to the home, not to the owner or tenant. They are paid back via energy bills, so whoever is living in the home (and benefitting from the energy efficiency measures) will pay of the loan. Loans are paid back via energy bills, but the government guarantees that repayments will always be lower than the savings made as a result of the improvements.
In order to get a Green Deal loan, homeowners will need to call in an accredited assessor to look at their home’s energy performance. They will then advise on what energy-saving measures might be useful. It is then up to homeowners to look for Green Deal providers to carry out the work. These are private contractors who have applied to the government to be able to carry out Green Deal work. 22 organisations, including both big-name property companies and SMEs, have signed up to be the scheme’s initial providers. If the scheme is successful, the number of providers is likely to grow.
Will it work?
Opinion among those in the industry is divided. Environmental think-tank E3G has expressed doubt on whether take-up will be high enough to have a significant impact, believing that interest rates for Green Deal loans have been set too high. However, the Green Building Council has backed the proposals, saying that no-one should lose out financially as a result of the scheme. For landlords, carrying out work under the Green Deal may become essential. From 2015, tenants will be able to request improvements, and landlords who fail to carry out improvements may find that it becomes harder to get landlords insurance.