The Green Deal which was shelved in 2015 has now returned and homeowners will once again be able to finance energy efficient improvements with a fixed-term loan on attractive terms.
The original Green Deal was launched by the Government in 2013 with loans available for home improvements that made properties more energy efficient. These included works such as double glazing, solar panels and new boilers. The investment made by homeowners was returned through huge savings on energy bills.
The Deal was halted in July 2015 due to low take-up, although around 14,000 loans were taken out up to that point. Existing loans would continue, with responsibility for repayments resting with the current homeowner – but no new loans were to be issued.
Reviewing the success of the scheme, the National Audit Office said the Green Deal had increased costs for both energy companies and customers, without any meaningful benefit. It noted that while 1.4 million homes had benefited from energy efficiency measures by the end of 2015 under various government schemes, just 1% of households had taken “green deal” loans.
But those disappointed to see the end of the green deal scheme will be pleased to learn that it has once again returned. The Government sold the Green Deal Finance Company (GDFC) to investment house Aurium Capital Markets and private equity business Greenstone Finance at the beginning of the year. This included a loan book worth a little under £44 million. The Government will no longer be involved in the scheme.
The new Green Deal
Changes are likely to be introduced to improve the success of the relaunched scheme going forward. GDFC’s Chief Executive envisages that the Company will sign up more installers and will market more extensively to ensure prospective customers are educated and informed. Additionally the Company intend to make improvements to their website to ensure visitors can easily find a local provider. Previously the end-to-end journey would take customers around three months and the Company would like to shorten the process. This includes reducing the amount of time credit approval takes to just one day, and installing in just a couple of days.
Initially loans will only be available for loft insulation, cavity wall insulation and energy efficient boilers. After this initial soft launch, GDFC intend to offer a wider range of products such as heating controls, LED lighting, solar photovoltaic systems and battery storage. The number of suppliers offering installation is also expected to increase with national coverage anticipated shortly. By the end of 2017, the Company expect the website to be relaunched with an accompanying app – a project that has been funded by investors through peer-to-peer lender Abundance.
Other changes on the cards include top-up loans for those not entitled to a Green Deal loan, advice on the various products available with their advantages/disadvantages and a ratings or an approval scheme for installers.
The deal is likely to be attractive to landlords who will be affected by new legislation coming into force in 2018, requiring all rented properties to achieve an energy efficiency rating of E or above on an Energy Performance Certificate. Affected properties include any domestic privately rented property which: has an EPC, and is either (i) required to have an EPC; or (ii) is within a larger unit which itself is required to have an EPC.