Green Deal or No Deal?

The new coalition are planning to up the energy efficiency stakes by offering funding to owners of poorly energy-rated homes, allowing them to improve their energy performance ratings. Landlords will be amongst those parties able to benefit from this new incentive.

When the requirement for an Energy Performance Certificate (EPC) on properties within the rental & sales sector was introduced back in October 2008, it marked the beginning of formalising energy efficiency within the home. It was a way of introducing energy efficiency as a selling point to tenants and buyers alike. The prospect of reduced energy bills to occupiers is certainly a tempting one.

Whilst showing the current energy performance, an EPC also gives an indication of what the performance could be with certain improvements - listing the recommendations for improvement, ranging from roof insulation to new boilers. However, there has yet to be any incentive or requirement for an owner to act on these recommendations and so often poorly rated properties remain as such, with owners choosing to spend monies on more prevalent expenses.

The Energy Saving Trust has been asking for properties with the poorest ratings - 'F' or 'G' to be prohibited from being rented. One fifth of all UK properties have the poorest ratings of F or G.

What is the Green Deal?

In short, finance will be available up front up to the value of £6500 by way of a loan per property. The repayment would then be attached to the energy bills for the property and paid back overtime by the occupier.

The intention from Downing Street that all of the UK's 26 million households are able to take advantage and apply for finance. Whilst the application process is yet to be confirmed, the main focus of the funding will be for measures such as insulation, draught proofing and potentially double glazing. Each home will only receiving as much funding as it actually needs, of course.

The loan will stay with the property rather than the individual, meaning tenants or new owner-occupiers would bear the cost of repayment via their energy bills, however they have said they intend to cap repayments so that they are never more than the saving made from the energy reduction for any one period.

The Government is in talks with some major national retailers, in particular B&Q, Tesco, Marks & Spencer and Virgin, with a view to these or other private sector firms providing the finance and so lessening the burden on the Treasury. Whether private financiers will be profiting from the loans or simply expected to reap benefits from the marketing advantages is yet to be seen.

The scheme is currently going through the required Parliamentary processes before being given the go ahead, though the intention is for it to be rolled out in the Autumn of 2012. Watch this space!

Extracts taken from - see here for original article

21 March 2011


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