Pardoes Post It
The Green Deal
Welcome to the first instalment of Pardoes Post-it’s! We will be sending out short briefing notes, from time to time, about topical matters that we hope will be of interest to you.
In this Post-it we will be considering the Governments ‘GREEN DEAL’.
You may well have heard of the Green Deal but what does it actually mean? The information bellow will hopefully explain the Governments aims with this scheme but if you would like to discuss it further please don’t hesitate to get in touch.
The Green Deal is a new way to pay for energy-saving home improvements.You'll be able to take out Green Deal finance to pay formeasures such as loft, cavity or solid wall insulation, double glazing, a new boiler or even small scale renewable energy infrastructure such as solar panels.
How does the Green Deal differ from a normal bank loan?
The way the deal differs from a standard loan is that the repayments you'll make on the loan will (in theory at least) be covered by the savings on your energy bill you make from having the energy-saving home improvements installed. This system is known as the 'Golden Rule' - you should not pay back more in loan repayments than you are saving on your energy bill.
But the Golden Rule is not a guarantee, just a guideline based on energy-saving estimates. You'll therefore only make overall savings on your energy bill once you've made all your repayments.
The Green Deal is not like a traditional personal loan, because it is attached to your property rather than you as an individual. This means it will pass on to the next owner of your house if you move.
How do I get started?
If you're interested in a Green Deal loan you will first need to arrange a visit from an assessor accredited with the Green Deal Quality Mark. All companies involved in the Green Deal must bear this mark and comply with a code of practice.
Green Deal providers include energy companies, shops and companies that install energy efficient technology. The provider will offer you a quote for a Green Deal plan. You could be expected to pay around £100-£150 for an assessment.
How is it different?
In the past, insulation has been available free or heavily discounted through schemes funded through everyone’s energy bills. The most recent free insulation scheme (Cert) finished in December 2012 but some energy companies still have offers.
There is nothing quite like it elsewhere. The interest rates are not yet known, but the government has suggested they could be around the 7-8% mark. Over a long period of time this rate of interest will add a significant amount to the cost of the products you buy.
Is the Green Deal worth it?
When the terms of the loans are known, we will be looking at how they compare with other ways of borrowing, such as paying by credit card or adding to your mortgage. As with any financial product, whether the Green Deal is a good deal will depend upon your personal and financial circumstances.
With the standard of let property having to meet a minimum standard by 2018 the Green Deal may be worth considering for farm and estate properties that are in need of some modernisation. Long term tenants may think it worth while to apply in their own right, it is as yet unclear who will pay when new tenancies are created and this needs to be considered carefully.
Green Deal plans may have different interest rates and different terms and conditions. We advise consumers to read the terms carefully and consider all the implications when signing up to this long-term financial commitment. We support the aim of energy efficiency but we will judge the Green Deal like any other product and do so independently.
When will the Green Deal be available?
Qualified assessors have been able to offer assessments since 1 October 2012 ahead of the 'official' Green Deal launch which was 28 January 2013. Although this launch date has now passed, no Green Deal Plan Providers have as yet made the details of their finance and loan packages public.
When this does happen there will be comparisons of the interest rates, costs and potential early repayment charges of Green Deal loans to identify the best opportunity to you.
Will it affect house prices?
Technically the Green Deal is a charge attached to the electricity meter of your house, not to you as an individual, so if you move house the Green Deal stays with the house.
It is not known how the Green Deal will affect the property market but there is a concern that some prospective buyers may not be attracted to a property with a substantial Green Deal charge attached to it.
The Green Deal has not been heavily subscribed to nationally and it will not be appropriate to all owners, however if you are considering carrying out any energy saving improvements to your property or ones you own then the Green Deal should form part of your thought process.