Amber Rudd, the newly appointed Secretary of State for Energy and Climate Change, announced on 23 July 2015 the end of the Green Deal project covering household energy efficiency improvements in England and Wales. There will be no further funding to the Green Deal Finance Company and there will be no future funding releases of the Green Deal Home Improvement Fund.
This brings to an end a seriously flawed initial scheme (Green Deal) and the more popular Green Deal Home Improvement Fund. Between them these schemes have been responsible for damaging the retro-fit insulation industry by creating a boom and bust situation.
It is highly surprising that a new plan for reducing energy consumption for existing homes has not been put in place at the same time as the announcement that Green Deal is being scrapped. Whilst no one can doubt that changes to the scheme were needed, Amber Rudd will be under some pressure to get a new scheme in place by the Autumn. Without some clear direction, the home insulation industry will be further damaged. They will already be suffering as all their marketing material featuring the Green Deal will have to be reprinted. There is no information on whether Green Deal registered installers will be included in any future scheme.
Based on previous schemes, if a new scheme was announced it is likely to include a requirement for an EPC (Energy Performance Certificate) that is less than two years old.
Below is a brief update on how those already in the schemes are affected.
Green Deal
Whist closed for new applicants the scheme will still continue as normal for those who have already taken out Green Deal plans. Bill payers in properties with Green Deal Plans will still need to repay the loans and this money will continue to be collected via their electricity bill.
Green Deal Home Improvement Fund
Existing applications and vouchers will not be affected. The latest release of funding will continue until 30 September 2015.
I took out the green deal plan, and the expense is appalling. I am selling my home and now find myself with debt. I was given wrong information, how can a government scheme possibly cost so much. I am looking for advice as I feel I have been miss sold a product. Even the settlement figure is extortionate
Hi Margaret
Sorry to hear of your bad experience. I can only agree on the costs associated with Green Deal finance; the interest charges, at around 8%, are higher than many people can borrow at and certainly much higher than they earn on savings. That was the main reason for the demise of the Green Deal; for most people it was better to fund the improvements from savings and/or other forms of borrowing rather than the complex mechanism of the Green Deal. That doesn’t mean the insulation improvements were not worthwhile if carried out correctly but the financial side of the scheme was nonsense in my view.
I am not an expert on selling Green Deal properties but as I understand it the Green Deal loan should be attached to the property’s electricity supply not to the home-owner so you should be able to transfer it to the new buyer. Of course the buyer may not want to take this over although if they value the improvements it’s hard to see why that would be a problem. There were so few Green Deal finance plans sold that there is little experience of them so people may be cautious and a cute buyer will use it as a negotiation tool. Being attached to the property makes the Green Deal loan an unusual type of loan and can affect the the conveyancing process.
If you are selling a Green Deal financed property you must
a) disclose the existence of the Green Deal to the buyer, and
b) anyone buying the property must be be made aware of it and they must agree to be bound by the terms of it
Some buyers may be put off by this but certainly not all so I guess it will be down to negotiation; a demanding buyer may want the improvements but not the loan liability attached to the property. I am presuming that your buyer has asked you to clear the debt before they will buy the house. The penalties for repaying the loan early can be substantial as the provider is entitled to claim for the interest that would have been paid by the homeowner should the deal have run its course.
On the sale itself and your response to a potential buyer not wanting to take over the debt, taking advice from your solicitor helping with the property sale is one option although this may cost. Alternatively the Citizens Advice may be able to help. On your view of being mis-sold the Green Deal finance I really can’t think of anyone to recommend.
Good luck with your sale.
Jon