The Government’s flagship scheme known as the Green Deal, which in accordance with the Energy Act 2011 has been designed to overhaul the energy efficiency of millions of homes across the UK, was fully launched on Monday 28 January 2013. The scheme will focus on reducing household energy bills and the carbon efficiency of properties by offering loans for carrying out works such as the installation of insulation or double glazed windows or funding for ‘microgeneration’ including solar panels and wind turbines. The ‘Golden Rule’ of the Green Deal is that in principle the loan repayments, which are made through electricity bills paid by the occupier, should be less than or equal to the savings made in energy costs. As the loan and repayments are linked to a property rather than to the individual that signed up, the Green Deal is something that many property occupiers, whether renting or purchasing, will need to become aware of.
A brief summary of the how the five stages of the Green Deal are designed to operate follows below.
Stage 1 is to get a Green Deal Assessor to visit your property and produce a report detailing the improvements that could be made and the likely cost savings associated with your options. There may be costs associated with an assessment and so it is best to check with the Assessor before your appointment.
You would then contact a Green Deal Provider (Assessors will be able to recommend suitable companies) in order to discuss your proposed Green Deal Plan, which is a contract entered into between you and the Provider, and the funding necessary to put it into practice. There is no cap on the amount of funding you can receive, but it is limited by the Golden Rule. The Green Deal Finance Company (GDFC) (http://www.thegreendealfinancecompany.com/) is a not for profit organisation set up specifically to provide finance for the Green Deal in the most cost effective way to all parties. Members of the GDFC already include British Gas, EDF Energy and E.ON Energy Solutions.
Your Green Deal Provider would then arrange for a Green Deal Installer to carry out the work for you.
All organisations providing services in connection with the Green Deal must be officially authorised and meet certain standards and will eventually be regulated by the Green Deal Code of Practice so look out for this quality mark which they will display:
The cost of the work carried out to improve your property will be paid for in accordance with your Green Deal Plan via your electricity bills. Green Deal Providers are then paid by the electricity supplier by passing on the repayments. As mentioned above, it is the occupier of the property that will pay the Green Deal Charge as part of the energy bills and so enquiries should always be made as to whether a Green Deal Plan is in place at any property being bought or let. Landlords wishing to enter into a Green Deal Plan may face resistance from tenants and may potentially struggle to recover the costs through the service charge and similarly tenants wanting to enter into a plan may be subject to conditions on consent from the landlord, including for example confirmation that the Plan will be fully paid off before the end of the lease so that the landlord has no residual liability. The Green Deal may lead to additional restrictions being drafted into leases and tenancy agreements to prevent tenants from entering into Green Deal Plans without the consent of the landlord, or preventing landlords from doing so without their tenant’s consent.
Before entering into a lease, tenancy agreement or purchase, talk to your solicitor about making formal pre-contract enquiries of a landlord or seller in relation to the Green Deal to ensure you don’t get any surprises on receiving your first electricity bill. It may be that in due course the Green Deal forms part of the Commercial Property Standard Enquiries, for clarity in every commercial property transaction but in the meantime it is worth raising the issue separately.
It remains to be seen how the Green Deal will work in practice but, if it lives up to the Government’s plans and expectations, it should help to change many properties for the better.