The Green Deal launches – are you tempted?

by , Campaigns Officer Energy & Home 27 January 2013
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You could call it the second coming. After the original launch-that-never-was in October 2012, the government’s energy efficiency scheme – the Green Deal – launches officially tomorrow.

Picture of a green house keyring

I should say that October’s ‘launch’ was only ever intended to introduce the legal framework for the scheme. Monday’s official launch has long been penned into the diary, to mark the date that the Green Deal becomes a reality for consumers.

Energy efficiency is the simplest and most effective way of cutting your household energy bills. Our research tells us time and again that one of your most pressing financial concerns is the rising price of energy, so now seems like a great time for the government to get in on the energy efficiency act. The recent cold snap makes it all the more timely.

Keep dodgy salesmen out of the deal

In light of the OFT’s recent report into poor practice in the energy efficiency home improvements industry, we’ll be keeping a close eye on how the Green Deal operates in the market place. Given that energy efficiency improvements can save you a good deal of money, we’re keen to see the Green Deal deliver on the very ambitious goals the government has set for it.

The Green Deal is a new product that we don’t want to see fall at the first hurdle. However, this could happen if mis-selling and dodgy tactics are allowed to surface. It’s quite a complicated product, so if you’re thinking about getting a Green Deal, you’ll need to keep your wits about you. Make sure you read our Green Deal check-list for lots of relevant help before you get an assessment carried out.

Don’t forget to shop around

Given its complexity, it’s vitally important that quotes for Green Deal loans are clear and comparable. And not just with other Green Deal loans, but also with other forms of finance such as regular loans from your bank. Whether or not it’ll be a good deal will depend on your individual circumstances. But like all financial products, it will be just as important to shop around with the Green Deal.

We don’t yet know how the market is going to develop, so we’ll be monitoring the situation as it develops in the coming weeks. We will be watching closely for any signs of bad practice, which must be stamped out as quickly as possible.

Are you considering having energy efficiency improvements installed via the Green Deal? Are there any details of this scheme that attract you to it, or even put you off?

Are you considering taking out a Green Deal loan?

No (71%, 192 Votes)

Yes (14%, 39 Votes)

Maybe (15%, 37 Votes)

Total Voters: 272

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53 comments

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James

I predict another ill-thought out Cameron government shambles. Every cowboy company in the country will jump on this and we will al be plagued by phone calls from companies offering too-good-to-be-true deals. Added to that, the debt is attached to your house, not you personally, so when you come to sell this will be a factor taken into account by your potential purchaser. Honestly,watch this space, there will be a scandal about this, no question about it, or I’ll eat my loft insulation.

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Em

I don’t understand who this product is aimed at.

If you have a mortgage, it would be cheaper to extend that to cover the home improvements and you get to keep more of the savings. If your mortgage company won’t lend against the proposed improvements, that suggests there is something wrong with the proposal.

If you don’t have a mortgage, you probably have the cash to make the improvements and, assuming it is worth doing at all, you get to keep all of the savings. With today’s low interest rates on savings it could be a good return on investment for the right product.

If you have neither a mortgage or the cash, circumstances suggest you should seriously consider selling up, release some equity and move to a more energy-efficient home, rather than burden your property with a financial charge that will make selling it harder in future. Why would I buy your property with a loan attached at a rate of interest I didn’t commit to?

The only winners seem to be secondary loan companies and double-glazing salesmen. Not areas a responsible government should be getting into bed with if they put their citizens first.

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SUZANNE HYDE

Sorry, but what a complete load of tosh!
I moved into my property a year ago.
It was built c. 1930. The wall cavity is too small to have the wall insulation.
It’s a relatively cold house and I paid to have solid wall insulation (on the outside of the property), which has helped a great deal.
To have the rest of the property done, it would cost me approx. £10k.
I do not have the room to borrow from my lender, but DO want to get the rest of my property insulated. It’s also looks good, with the fresh cream render over the top.
If I’m able to pay this back through my utility bill, then fantastic.
IF I sold the house during this period, not only is the prospective purchaser going to get a house that’s already had the work done and looks nicer, they’ll also save on their energy bills.
As soon as the loan is paid back, they’ll reap the rewards in the future.
Why would cowboy firms be allowed to subscribe to such a thing?!
I suggest you investigate this further so you understand more about the scheme and how it will potentially help homeowners such as myself.
If this DID prove to be a problem for future purchasers, I would consider paying off the debt using my equity.

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Em

>>> I don’t understand who this product is aimed at. <<>> I moved into my property a year ago. <<<

So you recently bought a property knowing that it was not energy efficient and would cost a lot in install external wall insulation.

Wasn't that factored into the purchase of the property? Why are other energy consumers obligated to help? And why does that require me to understand more about the scheme?

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SUZANNE HYDE

No. I bought a beautiful 1930′s detached house, having moved from a new build property (after splitting from my partner).
We live at the highest point in Nottinghamshire, so tend to get the raw end of any weather deal.
The house is SO cold.
How does anyone know that until after they’ve moved in to a property?
I had the very front of the house insulated on the outside. It looks amazing and appears to have made a real difference to the front of the house.
Because of this I would now like the rest of the house doing, but do not have the resources to finance this outright.
That’s why the Greendeal, is ideal for someone such as myself, in the situation they’re in.

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Em

Please forgive my continued ignorance in these matters.

Did the house not come with an Energy Performance Certificate? And shouldn’t that have highlighted the need for improvements?

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ecodave

Hi Suzanne,

Under the Energy Company Obligation, you should find that you receives a significant amount of grant funding towards the cost of solid wall insulation. And should you need to put any money in yourself, you may find that the amount of cash-back that is currently available when solid walls are insulated (up to £650 I believe) will help, or even exceed any required contribution.

You get access to this funding by initially getting a Green Deal Assessment completed. You should look for an assessor organisation on the greendealorb website. Or you could ring the energy saving advice service on 0300 123 1234.

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Chris Gloucester

SUZANNE HYDE.

You said about when you go for a green deal loan to insulate your effectively solid walls
“If I sold the house during this period, not only is the prospective purchaser going to get a house that’s already had the work done and looks nicer, they’ll also save on their energy bills”.

No, they won’t save on their energy bills, not at least until the loan for an inflated price installation plus 7% interest is paid off. Part of their energy bill will be repayments for the loan YOU took out.
So I would suggest either they’ll want a substantially discounted price or they’ll want you to pay off the loan, including penalties first, or they won’t buy. Any buyer is surely going to want to start clean and buy at a price which allows for improvements to be carried out in the way they want rather than via a loan contract (and not really a very good one) taken out by a previous owner. That’s the way I’d want it to be.

Getting your walls insulated is a really good idea but not so good via the Green Deal route.
If you have savings use those, they’re making little interest right now anyway.
Even borrow to do it, plenty of places you can do better than 7% interest.
You won’t be paying inflated prices, you won’t be mis-sold anything.
You’ll find it easier to sell your house should you ever choose to do so.
Best of all you’ll get all the energy bill savings, and even if some of those savings are used to finance the project overall you will do much better.

Don’t take my word for it do some research and the maths yourself.
I know it’s your money, but it irritates me that people will potentially get a very poor deal as a result of the Government making a dogs dinner of what could have been a very positive initiative.

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ecodave

Hi Chris, I don’t think you are aware of how solid wall insulation is going to be funded under Green Deal / Energy Company Obligation. As it has been identified as a key area that needs to be addressed, but won’t meet the Golden Rule, then there is a separate pot of money to finance installation of this measure. So you would save on your energy bills, significantly, and in many cases, you won’t have to pay anything for the work. So please don’t feed people badly researched information that might put them off greatly improving their circumstances.

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Chris Gloucester

ecodave,
I am fully aware that solid wall insulation will be different to most other improvement measures thank you.
I think you miss my main point, that being that dispite all the various subsidies and grants available for solid wall insulation very few installations will be free and the proportion of consumer libility won’t in my humble opinion be interest free, safe from artificially inflated prices or safe from pressure selling.

Insulating a solid wall (or any other upgrade measure) is a really good idea and it must be so that a financial arrangement including subsidy where appropriate that does not include the green deal (and if it doesn’t it should) must still be available and a better option for the most people. I only maintain that an option not including the green deal will be a cheaper more cost effective option simply because of the short comings of the green deal in it’s current form. Especially the case for all other imrovement measures.

That’s not (and never was) intended to put people off any improvement measure. In fact my intention is quite the opposite and by advising there is another, and I think, cheaper and better way the intention is to promote improvements.

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ecodave

Chris, I am just taking issue with your incorrect assertions in regards to not saving money with solid wall insulation. I have my own concerns as to the pressures that will be applied to GD Advisors to convert assessments into plans. I have concerns as to how recommended measures will work in real life situations. I have concerns at the rate of interest, should have been about 5%.

I note that you have chosen not to upskill to GDA, which may turn out to be a good thing, but it probably means you are less familiar with the raft of safeguards in respect of customer protection. These safeguards in themselves don’t guarantee anything, but they may put off the rogue traders that many fear will be attracted to this scheme. I think the first year of operation will see many bad apples removed, so early caution may prove wise.

Lets just guard against encouraging inaction.

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Chris Gloucester

ecodave, I think we’re still misunderstanding each other.
I make no assertions in regard to not saving money with solid wall insulation, nor do I intend to. I think surely we should agree that any upgrade measure is a good thing and potential must exist to save money with all and any.
It’s just that the potential for the big boys to inflate prices coupled to interest charges, upfront fees and the host of other anomalies within the green deal suggests to me that alternative approaches or financial models will prove better and cheaper.
My issues is not that the “concept” of the green deal is bad and I too would agree that we must guard against inaction. But a badly conceived green deal riddled with unnecessary costs and what will prove to be unpopular elements will not promote action, rather the loss of credibility which may well result will if anything promote inaction.

I think we’re both very much in favour of the same thing but we have a different idea of how to get there. If we’re going to argue lets argue about how we make the green deal cheaper, fairer, safer and better before people who potentially could benefit close their minds to it.

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David Ellis

The essential truth is that consumers will be saddled with debt at about 7% per annum. I would never consider encumbering my house with a transferable debt as this would probably put off at least potential purchasers, thus reducing the attractiveness of the property and hence adversely affect the selling price.
I operate a couple of buy-to-let properties. In the event any tenant sought to encumber my property and future tenants with debt of this nature, I would have no hesitation in issuing notice to quit. Incidentally, both properties are well insulated with double glazing, extra thick loft insulation and cavity wall insulation meaning that the Green Deal is not relevant to these properties but the principle of avoiding financial encumbrance for either myself or my tenants stands.

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Chris Gloucester

I’m already an Energy Assessor (licensed to provided Energy Performance Certificates) and I’ve researched the Green Deal very carefully because I have considered qualifying as a Green Deal Advisor. I’ve decided not to.

Now making your home more energy efficient is a really good idea. Energy costs continue to spiral so potential exists to save yourself a small fortune through improved energy efficiency, But in your efforts to achieve this is the Green Deal approach a “good deal”?
Well in it’s present operational form I’ve concluded it’s not a very good deal at all, and far more complex a system than is needed.

Most Green Deal Advisers whether they like it or not, whether they realise it or not are going to be doubling up as sales people. A proportion of their income will be commission and/or their potential for work will be dependant upon the client signing on the dotted line. I don’t care how many checks and balances are put in place unless the Adviser is completely independent mis-selling is going to happen.

There is an assessment fee to pay, either up front or as part of the eventual loan. The loan will be subject around 7% interest. The prices you’ll pay an “accredited supplier” will be inflated. (Just like a new boiler is 40% more expensive than a local plumber if you buy from British Gas or the like, except this might be worse)

The “Golden rule” where that improvement measure is paid for over time by using the savings on your energy bill, so your bill doesn’t go down. This means you don’t actually see any savings until you’ve paid off this loan? Well of course it must be repaid but that new condensing gas boiler will be ready for replacement by the time, or even before, you do pay off the loan. Especially so bearing in mind the inflated prices and the interest.
I can only see the “Golden Rule” definitely working for measures like loft or cavity insulation. That use to be very cheap or even free remember, now you’ll pay full price with interest.

The loan stays with the property if you sell up and move. Bound to make houses harder to sell. Would you buy a house with a loan attached to it, with you expected to carry on making the payments? Me neither.
Early loan pay off will incur penalty charges, so once you’re in it will expensive to get out (perhaps to make your house more saleable).
Tenants will be paying to upgrade their landlords property. Sure they’ll be delighted about that?

The Green Deal could have been designed in a format that actually gave consumers a Good Deal. All that was needed was a quote from a properly qualified installer (perhaps a “Gas Safe” plumber rather than a “Green Deal accredited Gas Safe” plumber to give an example) and an interest free Government loan. The existing Energy Performance Certificate system already identifies recommended improvements, no real need for a Green Deal Advisor fee costing twice as much. Far simpler far more likely to succeed.
The interest free element gives the subsidy or encouragement to actually do it, using a normal local installer gives much less likelihood of inflated prices, less chance of mis-selling. A much simpler and cheaper system all round.

My advice. Improve your energy efficiency and save yourself a significant amount of money through smaller energy bills, but do it by going your own way rather than through the Green Deal, and save yourself a shed load more money.
Your hard earned cash, your choice.

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James

Perfectly explained, thank you Christopher.
How long, I wonder, before the ‘Green Deal’ is re-christened as the ‘Green Steal’.

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Alec

Christopher,

Very helpful explanation, and while I agree that it is not the most efficient system. It will encourage and enable those less financial fortunate as those contributing to this discussion to afford energy saving improvements to their home.

The rationale for the scheme is to improve the housing stock in the UK (which is some of the oldest in the world), and make significant energy savings to contribute towards the energy savings targets that we are signed up to as a country (and will be penalised for if we miss them).

The cost is structured specifically to avoid the government paying. Providing an interest free loan for nationwide consumer spending is simply not viable, so the cost has been passed to the consumer via energy payments. The additional energy “tax” should incentivise people to save energy and make the efficiency improvements required (either via the scheme or privately if they have the capital to do that).

With regards to liability posing a problem to resale, in my view is a complete red herring. This is done all the time via service charges in leasehold properties and people get comfortable with that very easily. It is simply an additional cost of ownership.

Like other privately funded government scheme’s, such as NewBuy, it does not make sense for everyone, but does provide an accessible, easily executed option to those without the savings to use other options.

(For reference I will not be participating in the scheme.)

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Chris Gloucester

Alec,

I respect your opinion but I’m afraid I must disagree.
“Providing an interest free loan for nationwide consumer spending is simply not viable” really?
Yet subsidies for various forms of power generation both conventional and renewable are viable?
And is helping to achieve national targets for energy saving through interest free loans really subsidising “consumer spending” or is it money well spent improving housing stock which will help avoid penalties if those targets are not achieved?
I also entirely disagree with your dismissal of the effect being saddled with a green deal loan will have on resale potential. If it does not break a sale I’m sure it will affect sales value potential. No one I’ve spoken to likes that part very much at all.

I think, despite your measure of disagreement with my opinion of the Green Deal, your last line; “for reference I will not be participating in the scheme” sums up the way most people will think.

We’ll just have wait and see if the scheme succeeds won’t we?
In it’s present form I think the take up is going to fall very short of expectation, and rightly so because it’s a poor deal.

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SUZANNE HYDE

But if you took on a property that had had solid wall insulation fitted, the energy bill would still be exactly the same as if you hadn’t had it fitted. You’re house would be far more pleasing to the eye, you wouldn’t have to go through the mess and upheaval of having the works carried out and eventually, when the ‘loan’ has been paid off you reap the benefit of lower energy bills.
I wouldn’t be using cowboys ….. I’d use the same company that have already rendered the front of my property.
EVERYONE comments on how impressive it looks.
Two identical houses for sale -
One hasn’t had the solid wall insulation fitted, looks old and tired, you know you won’t be able to have cavity wall insulation as the cavities aren’t wide enough, it feels cold, draughty and the energy bills appear relatively expensive.
Property number two HAS had the whole of the property solid wall insulated, on the outside. It’s beautiful and fresh looking, with real kerb appeal.
The energy bills are lower, it feels a warmer, more modernised house. There are only a few year for the ‘loan’ to paid off and then you’ll see an instant saving on the energy bills.
Both are identical in price.
Which would you purchase?
When you investigate further, to buy the house WITHOUT the external rendering you find that all the money back schemes have finished, there are no longer any subsidies available and as you’re messing about doing your groundwork (to find it would cost you £10k to get it done yourself) the beautifully warm, insulated house has been snapped up!
That’s the way I look at it.
I could be wrong.
The proof is in the pudding, as they say.
If I had for example c. £3k left to pay back on the loan, I’d market the property that much higher.
It’s something to use for negotiation ….. I’d pay it off, I’d offer to pay half, I’d offer to make an agreement to carry on paying the re-payments …….
I’d like to think that in the very near future that there’d be that many houses that have had this type of work done to them that it will become acceptable to purchase a house with a loan attached.

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Chris Gloucester

SUZANNE,
Respect your point of view but I don’t agree.
Getting the work done, really good idea.
Doing it through the Green Deal, not such a good idea while cheaper and safer alternative approaches exist, and I believe they do.
It’s your money, your choice, and if you really think the Green Deal is the best way to go then do it.
I won’t be going that way for all the reasons already stated.

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SUZANNE HYDE

There’s no other way of getting the subsidy.

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Chris Gloucester

The option is there to pay upfront in full so subject to a final check I think you’ll find there is. Do a bit of research. I’m sure you’ll let me know if I’m wrong, and even if I am Green Deal “accredited” installers will probably inflate prices to erode subsidy value, just like British gas already charge 40% more for a boiler than a local plumber.
Anyway regarding the Green Deal in total it’s not just about solid wall, there are 40 odd other improvement measures in the equation and my critical comments are directed at the thing in general and as a whole.
But rather than us banging on about what looks like becoming an agreement to differ I’ll just repeat “your money your choice”

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Em

>>> “Providing an interest free loan for nationwide consumer spending is simply not viable” really? <<<

In case anyone has forgotten, the HMRC now has 5% markup on all energy sales. It's called VAT.

That would go a very long way to improving the energy efficiency measures required and financing any loan required.

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william

“Keep dodgy salesmen out of the deal”

I’m disappointed but not surprised that any government scheme could be released without any real safeguards in place to prevent the underhand from getting in on the act.

I for one, will be avoiding it until its run by and with “good” guys.

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ecodave

Are you aware of what safeguards are in place?

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william

Simple answer is no, but a headline comment of “Keep dodgy salesmen out of the deal” and comments like “shop around”, imply that its left to the private sector who are only in it to make money tend to put me off too.

I’m getting a picture rather like the double glazing industry, it all boils down to which sub contracted crew you get as to whether you have a positive or negative experience. The company doesn’t care as long as it makes money.

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ecodave

Love the stupidity of whoever thought to “red thumb” my questioning of Williams knowledge of safeguards in GD. Especially as his response was “the simple answer is no”.

Cue more red thumbs.

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MH

Won’t be touching this with a barge pole!

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SUZANNE HYDE

How do you know that the companies being used will be ‘cowboys’? The company I used to do the front of my house aren’t!
My property would cost a further £10k to solid wall insulate.
With the subsidies and cash back this should, in theory, be reduced to approx £4k.
I don’t mind paying back approx. 7% on a loan, if it means it can be done for that price.
The only thing I don’t think should happen is that I’d be penalised for paying the loan back early.
Other than that, I think it’s a brilliant scheme.

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Samos

As a DEA & GDA I am pleased that the launch of the GD has opend up the discussion.
In many ways you are all right, because it will be down to the choice that people make. I feel that as an independant DEA and GDA giving my clients advice on all options is the least I must do. This will include explaing that there are other repayment options apart from the GD and i am sure that those with the disposal income will take up the option to pay.
I also forsee that many of the clients that initially contact us for the GD will actualy fall into ECO areas and will find that the work will be fully funded via ECO or affordable warmth.

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Chris Gloucester

Hello Samos,
I’m a DEA too but not a GDA. From my previous comments it’s probably fairly clear why not, but in summary it’s because in it’s current format I don’t think the Green Deal is a good deal and won’t in my opinion succeed.
I applaud you for your comment where you stress the importance of the independence of the GDA and your intention to be open honest and impartial. However some operational models I’ve seen whereby GDA get commission on sales and even risk no sale no fee lead me to believe they won’t all be like you.
If you’ve been around as a DEA for a while you’ll already know how fees the DEA collects for EPC’s have reduced (panels and estate agents do far better than the person actually doing the job) and I don’t think it will be any different for Green Deal Assessments. But even with poor fee levels (for the amount of responsibility and work often involved) DEA’s are not subject the temptation of commission on sales because there is no sale involved.
For the GDA the story may be very different. It will be hard scrapping a living as a GDA, fees will be poor and the temptation to “push the sale” and collect commission might be too great for many.
This element which has great potential for mis-selling is the bit that worries me the most about the Green Deal, although there are plenty of other flaws. If a client sees inflated prices from installers and is aware of interest charged then like any other deal they can decide the deal is not competitive (as I think will often be the case) and opt out. However mis-selling pressure may not be so obvious to spot and safeguards such as regular audits and cooling of periods I don’t think will stop it.
I also think that your intention to remain completely honest fair and independent will mean that you don’t do many Green Deal assessments. Rather most will be done by the cheap, stack em high sell em quick GDA’s “selling products” and collecting commission.
I’d really like to be proven wrong in that prediction but I’ve a horrible feeling I won’t be.
The only way to guarantee impartiality is to make the GDA total independent within the Green Deal operational format and that means a rule prohibiting sales commission and the no sale no fee model.
We’ll have to wait and see how it turns out, won’t we, but I wish you well.
Oh and I agree about ECO helping the most in need , I’ve no issue with that scheme.

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Bret

Don’t forget that the private rented sector (where the poorest quality housing exists) will also have access to the Green Deal. Tenants can ask their landlord for consent to have a Green Deal measure installed.

It won’t cost the landlord anything as the charge will be attached to the person paying the bills. Its a win win situation for both landlord and tenant. Landlord gets his/her property improved- less likely to suffer with condensation damp, better resale value etc.. Tenant has a warmer home – better health and eventually lower fuel bills.

I see the Green Deal as a massive boost for this sector where some of our most vulnerable live (who by the way don’t have access to competitive loan rates).

In terms of the owner occupier middle classes and above, yes it is possible to secure better rates elsewhere, however, i think that the Green Deal has been designed to be market lead. I suspect that as a result, the insulation and energy efficiency industry will drive prices down through increased competition to create a more affordable market for all down the line.

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Chris Gloucester

Win Win for the landlord and the tenant?
How do you work that out?
The landlord gets his (or her) property upgraded but the tenant pays?
The tenant does not see a reduction in his or her bills until the loan is paid off.
Yep, really good deal for the tenant that is? NOT.

I’d suggest the law whereby a property cannot be let unless a minimum standard of energy efficiency is achieved whereby bills paid by the tenant are lower is long overdue. Currently sheduled for 2018, should be tomorrow, and the property owning landlord who is getting an income from letting should be footing the bill, not the tenant.

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Bret

Chris,

You clearly are an expert in this area.

My logic is that at least after energy efficiency improvements have been made the tenant will still be paying the same as before yet they will have a warmer home that is less likely to impact on their health (poor housing conditions are a major contributor to ill health as you will no doubt already know). I agree with you that landlord’s should shoulder more responsibility, yet the reality is at the moment the only real cause of action available to tenants who are living in properties which are poorly heated and lacking insulation is to complain to their local council’s Environmental Health department who can take legal action against the landlord under Part One of the Housing Act 2004 if a Excess Cold category one hazard is identified. However, landlord’s are still only required to do the minimum under this Act and there is nothing stopping them installing an electric storage heating system.

I think your idea about a minimum standard of energy efficiency is a good one. Lets just hope the future Regulations that accompany the Energy Act 2011 deliver this .

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Chris Gloucester

Hello Bret,
I wouldn’t necessarily claim to be an expert but perhaps because I’ve been looking at the Green Deal for some months I might be able to claim I’m perhaps a little better informed than many seeing it for the first time.
As an existing energy assessor (EPC provider) I’ve been the recipient of many offers of training to qualify as a Green Deal Advisor. Not free training so I’ve been looking very carefully at the Green Deal potential for success. The more I learnt the less I liked it on several levels, for reasons as I’ve already commented.
Your logic regarding tenants footing the bill for efficiency improvements on the basis they’ll be more comfortable while not paying out any more in energy bills has an understandable element of practical compassion.
However there are still a couple of things to remember.
To reach a level of health and comfort they might not only be repaying the loan, supposedly covered by the improved efficiency, but might well find the bill goes up, remember the “golden rule” is a generalisation based on a standard occupancy model and not a guarantee.
And you cannot get away from the fact that the landlord is getting his property upgraded for free by a tenant who has far less security of tenure than say an owner occupier.
The real winner here is clearly the landlord who might go on in later years to be able to command higher rent for a property upgraded at the expense of previous tenants. Don’t know about you but that does not sit well with me, although I’m sure some landlords will love it.
As I think we’re agreed the landlord should in all fairness provide tenants with a property of at least a reasonable level of energy efficiency by law. I think that should be at least an EPC level “D” and I think that should be law right now, never mind in five years time, or if ever.

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LPM

Will this be open to the consumer with a low to zero credit score? And if so what will the overall cost ?Will these costs change depending on a credit score? I’m waiting to see things in more detail before committing to anything. The up front charge is a bit of a hit. It might be cheaper to go with out and save up than spend and repay over years, one persons improvement to a property might be another persons added an unwanted long term lone which they didn’t set up but they have ended up tied into.

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Em

Apparently so. This has been promoted as one of the benefits of the scheme.

The logic seems to be that, because the loan repayments are collected by the energy provider through the normal utility billing process, few people are going to default and risk being cut off.

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richard

In 1981 I bought another home – I decided to make it heat efficient by Loft insulation – Double Glazing – wall insulation etc.- all at my own expense. Why can’t I get a rebate for all the extra heat and energy I’ve saved over the 30 plus years instead of wasting it as so many others have done?.

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Chris Gloucester

Richard,
Couldn’t agree more.
I’d suggest an incentive scheme should be introduced whereby you get a modest rebate on your council tax where your energy efficiency is above the national average, or a reasonably determined level.
This offers an incentive to become a bit more energy efficient and at least modestly rewards those who have done so.

Of course it could also be argued that less efficient homes should pay a little more but that’s going to present problems especially where energy efficiency, or lack of, is down to poverty. But who knows perhaps another (or perhaps other existing) scheme to help those in need and this would incentivize the poor to take advantage, get upgrades and save a bit on fuel costs.

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Em

That is a great idea, Chris!

The suggestion of banding council tax based on energy efficiency makes more sense than some arbitrary metric. (I never have understood, for instance, why I pay more tax because I have a garage. Why don’t I just block the highway and have my “driveway” maintained by the council for free?)

It would also demonstrate joined up thinking by sending out the right messages. Chances are that people who are wasteful with energy also churn out more rubbish and use more water and sewerage, so there is some logic to it.

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Chris Gloucester

Em,
Trouble is Government doesn’t seem very good at joined up thinking.
This dogs dinner of a Green Deal proves that beyond any doubt.

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Mo

Because you can afford two homes already, do you really need a rebate? What else have you been doing for 30 years that might have used more energy than the average person who can’t afford one house? Flying long distance, driving a gas guzzler etc etc………

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Em

I feel one of the issues with the Green Deal is the type of finance loans they are backed by, coupled with the effect of the “Golden Rule” cap. From what I have read, the minimum term is 10 years, the maximum is 25 years and the typical interest rate will be 6.5% to 9.5%.

I can well imagine someone being sold a 25 year loan – because that is the minimum term that will satisfy the “Golden Rule” – and maybe not appreciating that:

a) They will pay back more in interest over the 25 term than the total capital borrowed.

b) If they leave after 5 years, then less than 10% of the capital will have been repaid, potentially encumbering the next purchaser, tenant or landlord (if they were stupid enough to agree to a charge on their property) with a substantial outstanding debt, or having to pay it off themselves to sell or terminate the lease whilst having seen relatively little benefit themselves.

It would be much more advantageous if Green Deal loans were available over 3 – 10 years, even if they were NOT capped by the “Golden Rule”. The total interest would be substantially less, and the real financial savings would then start to accrue much sooner.

In the case of a 25 year loan, someone may never be in the property long enough to achieve a substantial saving – it will have mostly gone in financing the loan.

My advice, if you are going for the Green Deal at all, would be to take the 10 year loan option in every case. If there is no option to achieve break-even in 10 years because of the Golden Rule, then walk away.

This is also a good negotiating stance to take. Any hard-nosed salesman will push for a longer term loan, because they can inflate the price of the improvements they are selling without increasing the monthly repayments. Tell them you are only prepared to sign up for a 10 year deal and they may well have to discount the cost of the package they are selling, to satisfy the Golden Rule in a shorter time span.

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ecodave

The problem with shorter term plans with the Golden Rule thrown out of the window is that people will be signed up by “hard-nosed salesmen” into a plan that they can’t afford to repay. You do understand that millions of people are struggling or unable to pay their fuel bills as they are, and your plan will increase those payments.

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Em

I can well understand that, and I would prefer to see some DIRECT assistance with energy efficiency for those that are genuinely struggling or are unable to pay their fuel bills. Using subsidies to make homes energy-efficient can permanently reduce net energy demand and is a more effective use of public money than trying to generate additional energy using solar panels and wind farms to fill the gap. If someone is already in the situation where they are unable to pay their fuel bill, the Green Deal isn’t going to help them.

Encouraging people in financial difficulty to take on long-term debt at high rates of interest is not the best way of assisting anyone, particularly those of fixed incomes. And let’s be clear – the Green Deal does not provide a single Joule of heat on its own. Energy prices may well continue to increase and the household has a fixed or diminishing amount of money to spend on fuel.

Then what? The Green Deal debt still has to be paid off at exactly the same rate regardless of other needs and priorities, whilst the remaining money buys less energy than before. It doesn’t matter how efficient a gas boiler is when there is no fuel being burnt and the improved insulation becomes somewhat pointless when there is no heat to retain.

The Green Deal is primarily about assisting the government to meet its self-imposed emission commitments at no cost to itself. Unfortunately, they just forgot to check with the poor if they would like to help out by taking on more debt.

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Chris Gloucester

Em,
Very well put.
And you are correct in saying that it is far better to subsidise energy efficiency than to subsidise the generation of renewables. Not only the “biggest bang for your buck” but a more socially fair approach.
People who, for reasons best known to themselves, favour and promote the green deal seem to think that anyone who thinks it’s a poor deal is opposed to energy efficiency.
Simply not true of course.
Rather opponents of the green deal (like myself) are against a poorly conceived scheme which will result in less retro fitted efficiency because the deal is bad.
Like you I think the only way to get substantial retro upgrading is through heavy subsidy using revenue collected through general taxation. This privately funded Green Deal” approach plays into the hands of those who will be looking to maximise profit potential, and that because of the nature of the beast will never enable the economics to work out well for the poor consumer. So other than a few who get sucked in (or mis-sold to) it’s not going to work, at least not in it’s current operational format.
The Government really needs to think again, and I suggest think subsidy so real energy cost savings can be realised much sooner. Not after repaying a ten or twenty year loan including interest for overpriced items, that’s ridiculous,

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GD?

Just watch this – http://www.youtube.com/watch?v=r7BT2Ltcdh8

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Chris Gloucester

Somewhat over the top but many a true word………..
Detail accuracy closer than I expected, probably put together by someone who has attended one of the Green Deal seminars run by training companies.

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Mick fletcher

I think some of you guardian reading types aren’t as clever as you may think you are , the average price for a new boiler with energy controls is around £2800 and you would get the average 3 years manufacturers warranty , how ever if you financed it through the green deal either fully or part you would then enjoy the benefits of the deal such as 10 + years parts & labour warranty on the boiler backed up by the likes of plumb center , generally speaking each extra years warranty you extend you boiler by is approx £150 , where as under the green deal you would benefit from an extra 7 years warranty with a value of around £1050 , this surely is a far sexier deal than not doing it the green deal way. At 7.8 % it’s not bad for an unsecured loan, Tescos charge 5.2% and want a kidney for collateral !

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Chris Gloucester

Actually Mick I recently had fitted a new replacement boiler for £1500 along with a 7 year guarantee (10 on the heat exchanger) from a local Gas Safe plumber. I can opt for a service contract or not and still be quids in. As for 7% interest what about the recently announced “Nationwide Green Additional Borrowing” scheme only 2.3%?
I’m all for upgrading efficiency and I like the concept of the Green Deal but until prices and interest are competitive (and I’d like to see interest free loans) I don’t think it’ll catch on.
I’m also not keen on many of the other silly elements either like the loan tied to the house and the prospect of tenants paying to upgrade their landlords property.

Roll on a sensible and fairly priced Green Deal Mk2.

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edward260

Hi all, we’ve written this guide to the Green Deal to try to make it a little less complicated. Check it out: http://hoa.org.uk/advice/guides-for-homeowners/i-am-improving/the-green-deal-is-it-right-for-your-home/

Hi Edward260, thank you for sharing your guide to the Green Deal.

We encourage all members of the Which? Conversation community to share their viewpoints and get involved with the debates, in addition to sharing links to handy information.

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paganlady

I too looked at the Green Deal,but as someone who is in their sixties and retired the sums did not add up. I need replacement double glazed windows as still have original single glazing.This makes the house cold and damp.However, as I am a low user of energy(have to be as on a tight budget) it would take years to pay off the loan during which time I will probably need to move. I agree with the majority in that a house with a loan attached is not an attractive prospect,paying off early incurs penalties. It seems certain people can get the work done for nothing ie. unemployed,disabled,pensioners on pension credit. Whilst not begrudging them warm homes, why is it that others on low incomes never qualify for any assistance. I am totally fed up always losing out on schemes because of this.If Government are serious they need to extend the help offered, Anyone who could afford it would pay for their own improvements. Why charge for the assessment and add interest to the loan? The general public is already funding the green deal through sky high fuel bills.

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Mo

I would really like to have solar panels fitted on my house through the Green Deal. I have made numerous enquiries I cannot take this up as I am unemployed and do not seem to be able to take on a loan to pay for installation. This means a significant number of individuals cannot access the Green Deal. I think this is unfair as there must be many people like me who want energy efficiency products but cannot access any due to our employment status.

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