The Government’s flagship eco-renovation programme, the Green Deal, has had a difficult first six months. Blamed for a massive drop-off in loft insulations for the poorest households as money gets shifted around government budgets, the Green Deal has only attracted a handful of firm commitments from home owners to install energy-saving measures.
Under the programme, house owners can request an assessment by a qualified assessor who will recommend cost-effective measures such as double glazing, solid wall insulation or a new boiler. The house owner can then take out a Green Deal loan to pay for the improvements, paying the money back through savings on fuel bills. The Government hopes some 14 million homes will be improved over the next seven years, reducing the UK’s reliance on fossil fuels.
For an apparently well-intentioned scheme, an awful lot has gone wrong since its January launch.
One side effect of the Green Deal is a sharp fall in previously free or subsidised loft and cavity wall insulations, leading to, irony of ironies, a policy aimed at getting millions of homes better insulated, causing thousands of job losses from the insulation sector.
When fuel-poverty figures for this past winter are released, the Green Deal may even be blamed for the expected massive increase in households struggling to pay fuel bills, as many of the free loft insulation schemes were aimed at low-income households. That’s quite an achievement for a policy aimed at helping people heat their homes more economically.
On the plus side, the more than 40,000 Green Deal assessments carried out this year suggests there is interest among house owners in making their homes warmer. Yet so far only four out of 40,000 have signed up for the loan to actually get the improvements done. So just what has gone wrong? Most critics blame the high loan interest rates – 7 to 8 per cent – leading once again to the suspicion that government policy is aimed at fleecing the public and lining the pockets of big business.
The UK Green Building Council, representing the green building industry, spooked by the low take-up of Green Deal loans, held an emergency meeting last month to discuss how the deal can be saved. A report – drawn up by a task force of developers, environmental groups, the insulation industry and Green Deal providers and discussed at the meeting – suggests that tax incentives, either stamp duty rebates or council tax reductions for energy-efficient homes, could encourage more people to insulate their homes. Conversely, energy-inefficient homes will be penalised with higher council tax rates.
We remain convinced for landlords, the green deal in its current form is not a good idea. OK there's an argument that it'll be your tenants paying back the loan via their utility bills but they're not going to stay for long when their bills are consistently higher than everyone elses even allowing for the cost savings they should obtain through better insulation. Also, should you wish to sell the property prior to the loan being repaid, a prospective buyer may be put off if they know they're going to get saddled with a residual debt costing 7-8% p.a. They would be better off adding the costs of extra insulation to their mortgage if rates remain at an average of 3% pa.