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The Green Deal
The Green Deal, the Government’s flagship home improvement loan scheme, has just been relaunched. This time around, it is private sector run and set to be a significant step forward for the energy efficient home.
In its new guise, the Green Deal plan remains largely unchanged from the Government initiative. A provider assesses the home for installation of energy efficiency improvements. Payment of the improvements and installation are then covered by way of a form of loan and repayments of the loan are automatically added to the property’s electricity bill easing the process of repayment.
A Green Deal plan comes with a guarantee for both the work and the product. Loan terms are generally longer than with regular consumer credit loans, with repayments set at a more affordable level.
Unlike a more traditional loan product, where the liability for the loan tends to sit with the individual taking out the credit, a Green Deal loan stays with the property, even if the owner sells the property to someone else. When it comes to selling the property, the new owner will be compelled to adopt the existing Green deal debt. However, there is a possibility that this may affect the saleability of the property, but it is expected that there will not be any early repayment charges irradiating the issue.
The amount that can be borrowed is worked out with information based on likely efficiencies with the new products and the lifespan of the measure being installed. For example, if a new boiler were to provide a predicted annual saving of £75 with a lifespan of 15 years, the Green Deal plan loan could be taken out for up to £1,125. Typically, loans will be paid back over 12 years, or 25 years for insulation measures.
The scheme is likely to be very popular within the rental market. Landlords will be able to pass on the costs of home improvements to their tenants through their utility bills whilst occupiers reap the benefits of fuel efficiencies and warmer houses. In addition, the repayments for the loan in the first year will be capped so as not to exceed the energy savings that a typical user would save. Therefore, as a typical energy user, the improvements shouldn’t cost a tenant any more than they paid before the work was carried out.
Of course, as the loan stays with the property when the tenancy has run its course, the new tenant will be liable for the remaining costs during the time they occupy the house. Tenants can, therefore, be confident that they will only be responsible for payment of the loan whilst they are benefiting from the improvement.
The rollout of the scheme, by the Green Deal Finance Company (GDFC), is expected to be slow as auditing of installers applying to be a part of the scheme is rigorous and thus time-consuming. A large volume of installs will also be audited to assess capability and ensure only reputable builders are engaged. Auditing will be carried out under the PAS2030 framework set by the initial Government scheme.
If you are looking for advice on the Green Deal, in the first instance, contact Harry Epsom on 01858 435 970 or email email@example.com.