The Green Deal is the flagship government scheme intended to help property owners, including landlords, improve the energy efficiency of their properties for free.
First proposed to parliament in December 2010 as the centrepiece of the Coalition Government’s Energy Bill, the Green Deal is designed to boost the energy efficiency of buildings and reduce heating bills.
The deal will allow private energy firms to provide domestic and commercial customers with double glazing, loft and wall insulation and other structural and energy reducing improvements.
Due to launch from autumn 2012, participating energy utility companies and accredited retailers such as Tesco, B&Q and Marks & Spencer will provide customers across the UK with quality-assured work to their homes, businesses and community spaces for no upfront cost, and without loans or advance finance.
The full cost of the measures will be recovered through instalments on the electricity or gas bill over several years, and because the Green Deal is not a personal loan or an advance payment scheme, there is no obligation to continue paying the instalments if you sell the house.
Suitability for the scheme will be assessed on a simple calculation, known as the “golden rule” of the Green Deal.
The golden rule is that the predicted savings from the energy efficiency improvements to your property must equal or exceed the cost of installation.
This means the cost of the utility bills after the work has been done, including the loan amount, cannot be more than they were before the energy efficient improvements were installed.
In other words, the loan for the work is repaid by the savings in the utility bills.
The assessment of energy efficiency improvements will be made by an authorised “Green Deal” advisor.
The government recently announced funding of £3.5m to help train the advisors ahead of the October 2012 launch.
With a Green Deal package the scheme will allow landlords to receive energy efficiency improvements without any up-front capital payments.
The costs of the works will be attached as a loan to the utility meter of the property and repaid by whoever pays the utility bills – in most cases, the tenant.
This is considered fair as the person benefiting from the energy reducing improvements is the tenant and most will see some reduction in their bills.
The scheme will be rolled out from October 2012 and it is hoped that landlords will take full advantage.
Not only is it an opportunity to demonstrate that landlords are capable of self-regulating when provided with financial incentives, it is likely to reduce landlords maintenance bills and provide tenants with warmer properties in which to live that are cheaper to heat.
A major incentive for landlords to sign up to the green deal as soon as possible is new legislation being implemented from 2016.
Under the new legislation tenants will be able to demand energy efficiency improvements from their landlords.
Should landlords refuse consent (without a justifiable reason); local authorities will be able to compel landlords to undertake the improvements.
They will also be able to fine landlords for not doing the improvements when the tenant first asked.
It is likely that fines will be up to £5,000.
There will be more legislation in 2018 when the Government will bring in minimum energy efficiency standards. Landlords will not be allowed to let out any property with an Energy Performance Certificate (EPC) banding of ‘F’ or ‘G’ unless the landlord can prove they have done all they can through the Green Deal and other subsidies to bring the property up to an EPC band ‘E’.
I would expect that all responsible landlords will be eager to take up the benefits of the green deal.
The scheme improves tenant’s homes, adds capital value to the landlord’s property and reduces the country’s energy consumption.