What is the Green Deal Scheme?
The Green Deal is the coalition Government’s flagship carbon emissions reduction project. The reason for the Green Deals emergence is to encourage as many people as possible to take measures to make their homes more energy efficient and it will achieve this by providing all of the upfront finance for such measures by way of a loan. The loan will be paid back in monthly instalments over a period of years. The idea is that the repayments will no higher than the money saved on your fuel bills.
Who Can Apply for Green Deal Finance?
It is the Government’s intention that there be no restrictions on who can apply for finance through the Green Deal so potentially all of the UK’s 26 million households could take advantage. It is not means tested in the way that most benefits are and neither an applicant’s current credit commitments nor his past credit history will be taken into account. Applicants do not need to own their home to benefit and where a property is rented, either the landlord or the tenant could apply.
How Much Will Be Available From Green Deal?
It is estimated that each home will be entitled to up to £10,000 worth of Green Deal finance but of course the Green Deal will only provide as much finance as the recommended work requires.
What Can Be Purchased With Green Deal Finance?
At present the focus seems to be on energy efficiency measures such as insulation, draught proofing double glazing, new boilers will certainly be part of the package, but it is not impossible that the list could be extended to include some microgeneration measures as well.
Who Will Finance the Green Deal?
The Government is in talks with some major national retailers, in particular B & Q, Tesco, Marks & Spencer and Virgin, with a view to these and other private sector firms providing the finance These will be known as Green Deal providers and so lessening the burden on the Treasury. It may need to underwrite the loans though in theory because the Green Deal makes applicants better off, levels of default should be negligible.
How Will the Green Deal Repayments Be Made?
The loan will be attached to the property’s energy bill and the repayment schedule will be calculated to ensure that the repayments for a given period are less than the resulting energy bill savings, so that from the outset the household will be financially better off.
It is likely that repayments will be collected by the household’s energy provider via the electricity bill, though the details have yet to be finalised. Because of the necessity of ensuring that the repayments are kept below the cost savings, repayment terms will vary in length depending on the amount borrowed and the resulting savings.
Will the Green Deal Provider run credit checks on me or am I guaranteed to get the works?
There is nothing to suggest that Green Deal Providers will run a credit check, there is currently a large fund being established backed by major banks and the hope is that everyone in Britain will get access to Green Deal at the same low rate regardless of their credit rating.
What if the product breaks down or fails in some way whilst I am still making making my Green Deal payments?
It is likely that DECC will insist that all works installed will be required to have an insurance backed warranty covering breakdown or premature failure. This warranty will not however cover fair wear and tear of parts within a boiler for example. Equally there may be conditions in the Green Deal plan that will require the bill payer to service products or risk invalidating the warranty.
I pay through a key meter; can I still get a Green Deal upgrade?
Yes – Green Deal charges can be added to a key meter but if there are any arrears on the account it could affect your ability to benefit from a Green Deal package
What if I rent a property and the previous tenant has left without paying the electricity bill, will I have to pay off the arrears?
No. All debts remain with the person whose name is on the electricity bill so you will just pay the charge from the day you take over the property
How Will the Green Deal scheme Be Secured?
The Green Deal finance will be attached to the property and not the individual. This will get around the problem of a homeowner having to continue repaying the loan after he has sold up and moved on. Unlike a mortgage however the loan does not need to be repaid upon sale.
The effect is that when purchasing the property he will be taking on responsibility for the loan and whilst this in itself is not onerous since he will also take the greater benefit of lower fuel bills, there will no doubt be other properties on the market where similar measures have been installed but with Green Deal finance. These properties are unlikely to be any more expensive as a result and so may be more attractive to a potential purchaser, particularly in a buyer’s property market which we have at present.