Conveyancer, Terese Kingman, looks at a new energy efficiency initiative for residential property
The Government’s new initiative to encourage homeowners to improve the energy efficiency of their homes was introduced in January this year. The idea is that Green Deal home improvements will help reduce the average homeowner’s heating bill.
The improvements include:
- Replacement windows
- Draught proofing gaps around windows, doors, pipework
- Loft insulation, as heat rises and could escape through the loft
- Replacing an old boiler
- External and internal wall insulation
- Cavity wall insulation
- Solar panels
The Department of Energy and Climate Change is to make a loan to the Green Deal Finance Company which will pay Registered Providers for the improvements. The improvements will therefore be funded by a Green Deal finance package meaning homeowners pay nothing up front. Instead the initial costs of the works are paid through the Green Deal Finance Plan and added to consumer’s electricity bill.The cost of the home improvements together with interest are therefore a consumer energy debt which remain on the electricity bill until it’s repaid. The idea is that repayments are to be no more than the consequent savings on the fuel bill.To sign up to the Green Deal you will need to contact your local Green Deal Assessor or Registered Green Deal Provider who will visit your home and recommend ways of improving the energy efficiency of your property. They will give you a quote for the recommended improvements and discuss with you the Green Deal Plan (a contract between you and the Provider which sets out the improvements to be undertaken and the repayment plan).
A Green Deal Installer/Maintenance Contractor will then carry out the necessary works. The contractor should provide you with a guarantee for the improvements of up to 5 years for minor works and up to 25 years for major works.
Are there any pitfalls? Well, there is certainly no guarantee that the improvements to your home will increase your overall household finances.
Any minor improvements to the property such as loft insulation, replacement windows and doors or a new central heating boiler may not require you to obtain your mortgage lender’s consent, but substantial works such as fitting solar panels will require you to obtain your lender’s consent before commencing the works.
If a property is subsequently repossessed by a mortgage lender then they become liable for the Green Deal charges on the property, since the Green Deal is attached to the house and not the home owner.
As the loan stays attached to the consumer’s electricity bill when it comes to selling the property the loan will pass to the new owners. However, what if the new owner is not happy to continue paying for these improvements each month on their electricity bill? In these circumstances the buyer may insist on the seller repaying the loan in full. This could result in the seller incurring financial penalties for early repayment of the loan. Furthermore, any new occupant in the property will require a new assessment to be carried out by the Green Deal provider.
We would recommend anyone who is thinking about applying for home improvements under the Green Deal to read the terms and conditions very carefully. In particular they should check the interest rate, the early repayment charges and (before agreeing to the works being carried out) ensure the rates of the provider are competitive.
If you have any queries regarding this article or any other property matter please contact Terese Kingman at Slee Blackwell Solicitors, 2 Lime Court, Pathfields Business Park, South Molton on 01769 575982 or email at [email protected]