- It’s a type of Government-backed finance designed to encourage the introduction of energy-saving measures into our homes without home owners having to bear (all of) the upfront costs.
- It takes the form of a loan, which is linked to the property, rather than the individual. Loans are paid back through the electricity bill over a period of 10-25 years, depending on the measures introduced.
- The ‘Golden Rule’ of the Green Deal scheme is that you should not have to make loan payments for longer than the lifespan of the measure and the charges should not exceed the expected financial savings, i.e. there should not be a net increase in your bills. If this is not the case, Green Deal finance could still be used up to the estimated savings level, with the home owner then making up the difference.
- Green Deal finance is easier to secure than a typical loan – 80% of people are likely to be eligible – and it’s an unsecured loan (i.e. you wouldn’t lose your house if you couldn’t meet payments).
It’s likely that you could benefit if you’re interested in producing your own energy through micro generation (e.g. PV PANELS), or if your home isn’t currently energy efficient as a result of poor insulation, an old boiler, poor heating controls, etc.
HOWEVER, research published recently by the Department for Energy and Climate Change (DECC) found that the actual savings from introducing ‘green’ measures in the home seem to be lower than previously thought. The Energy Saving Trust (EST) will be amending their figures to reflect these findings and we’ll update here as soon as these are published.
Before committing to securing funding for larger measures such as new boilers and insulation, it’s certainly worth checking where you’re currently losing heat and wasting energy in your home. A quick trip around your house with a smoke pen or draught detector could help you to identify draughts, which could be addressed with a simple roll of insulation tape.
It’s also worth bearing in mind that the ‘benefits’ of introducing green measures should not only be thought of in terms of financial gain; although some measures and technologies may never pay for themselves, they will still provide significant other benefits in terms of greater energy efficiency, comfort and indeed health in the home.
There are 4 main steps involved:
1 – Assessment
The first step is to arrange for a home assessment with an assessor, who has been accredited with the Green Deal Quality Mark. Visit http://gdorb.decc.gov.uk/consumersearch to find assessors near you….there are currently over 2900 Green Deal registered Advisors, so you should be able to find one locally.
You will generally have to pay for your assessment, with prices varying significantly (£100-£150), so it’s worth shopping around. It’s also worth checking whether your local authority has any funding available for Green Deal assessments. You could benefit by choosing an assessor organisation who could carry out the works, as they will often then knock the cost of the assessment off the cost of improvements.
An assessor will look at your home’s energy efficiency and your energy usage. They will then produce a Green Deal Advice Report, recommending which energy-efficiency or micro-generation measures you could introduce. This should highlight those measures that meet the golden rule. The assessor should discuss simple ways to save energy, in addition to the bigger money-saving measures, and outline any other funding for which you might be eligible.
The cost of the assessment is proportionately larger for smaller improvements, so it’s definitely worth looking at other simple energy-saving measures in the first instance.
2- The Green Deal Plan
Once you’ve received a copy of the Advice Report, it’s up to you how to proceed. If you decide that you’d like to go ahead with one or more of the measures, you can (and we advise that you should) then contact a number of Green Deal Providers (again only approach those who are accredited, of whom there are currently over 125 nationwide) and ask them to provide quotes for the work. Your assessor should have made you aware of any links they might have with certain providers, and you’re under no obligation to go with them.
The quote should detail the costs of the measures, installation and finance (pay particular attention to their interest rate and payback period as this is set by the Provider and could vary significantly), along with likely savings and how long these savings should last. Bear in mind that there aren’t any Government guidelines recommending costs of works – they’re open to the market, so you should shop around and be open to negotiating lower prices.
It’s important to remember that not all measures will be covered under the Green Deal and for some only part of the cost may be funded – make sure that you’re clear on which ones these are.
If you decide to go ahead with the works, your chosen Provider will then put together a Green Deal Plan, confirming the financial terms of the agreement, including the length of the loan and the interest rate. It will also contain information relating to warranties and stipulate that bill payers should not be prevented from switching suppliers. Please make sure that you are aware of the repayment terms and are happy with these before signing the Plan.
All Green Deal plans have to be approved by the Green Deal Finance Company – the central body providing the cash for loans to providers. They charge all providers 6.96% interest to borrow the cash; a set up fee of £63/loan and an annual fee of £20 per loan. The Green Deal Finance Company won’t back plans for less than £500
Prior to signing up, it’s worth considering other possible finance options (see below).
3 – Installation
Once you have agreed a Green Deal Plan with a Provider, they will instruct an installer to carry out the work. NO PAYMENT SHOULD BE MADE TO THE INSTALLER if you have agreed a finance plan with your Provider – it’s worth checking that they’re aware of this before installation works begin.
4 – Repayment
Unless you’ve chosen to pay for your measures upfront (which you’re likely to be better off doing if you can afford to), the cost of the measures will then be paid back over time from savings on your electricity bill – your electricity supplier will pass on the payments to the Green Deal Provider.
Repayments are likely to last 10-25 years; they stay with the house, not the individual.
The amount you pay back should be no more than a typical household would save from having the measure(s) introduced, so they shouldn’t cost you anything.
If you’re on a prepayment meter, a small amount will be taken each day. If your savings from measures are on your gas bill rather than your electricity (from which the payments are taken), you may need to top up your prepayment card/key more often to compensate.
Although you should be able to pay off the plan early, you may incur an early repayment fee if your finance plan is 15+ years…however, any fee should be offset against the amount your Provider can earn from reinvesting the sum repaid on the market, plus savings in admin fees.
How will I know if it’s worth me paying for a Green Deal Assessment and taking out Green Deal Finance?
Before having an assessment, have a look at our energy savings calculator or contact one of the organisations below for advice regarding whether the Green Deal is likely to be right for you.
Energy Saving Advice Service, 0300 123 1234
Home Energy Scotland, 0808 808 2282
Given the interest payments attached to Green Deal finance, and the lengthy repayment plans, you’ll almost certainly be better off paying for any energy-saving measures upfront if you can afford to do so. Similarly, if you think that you’ll be able to pay off the amount in a shorter timeframe (and are confident you could stay on top of monthly payments), it might be worth considering making payment using a 0% spending credit card and then switching to a 0% balance transfer card for 30 months (as outlined on moneysavingexpert.com).
The fact that likely savings from the introduction of energy saving measures look to be less than previously thought suggests that less measures might qualify for Green Deal finance in the future.
The Green Deal Home Improvement Fund (GDHIF) is now closed to new applications. To read more about the scheme, click here.
Ultimately it depends what’s important to you. If you’re just looking to save money on a short-term basis, then you might be disappointed. However, if reducing your carbon footprint and living in a more comfortable and healthy home are equally important to you, then it’s definitely worth considering. Don’t forget, too, that you should ultimately see significant financial savings, once your Green Deal measures have been paid for.
No, although additional help is available from ECO funding if you are.
It’s difficult to say for sure.
On the plus side, things like a new boiler or increased insulation make a home easier to heat to a comfortable temperature, so it’s likely to be more attractive to potential buyers. People are also increasingly aware of likely energy price rises, so will be keen to keep energy requirements as low as possible. Research by the DECC published in June 2013 found that making energy saving improvements to your home could increase its value by an average of 14%, and up to 38% in some areas of the country.
Conversely, it’s possible that potential buyers could be put off by the idea of a loan attached to the property, particularly if the Green Deal doesn’t gain momentum and general take up remains low.
Tenants, rather than landlords, benefit from reduced energy costs, so it falls to the tenant to make the repayments through the energy bills (assuming that bills aren’t included in rent payments)
Yes, a huge amount. The key thing to look for when considering anyone involved in the Green Deal is the Green Deal Quality Mark. If you have any problems with the Green Deal, you should raise these with your Provider in the first instance (assuming that they’re not the problem!), and if it remains unresolved then complain to the Green Deal Ombudsman on 01925 530 263.