What is it?
The Green Deal is the Government’s (Department of Energy and Climate Change (DECC)) flagship initiative to reduce carbons emissions and save energy. It was enacted under Part 1 of the Energy Act 2011 and launched on 28 January 2013.
Under the Green Deal, property owners will be able to install energy improvement measures with no upfront payments. There are currently 45 eligible improvements including solar panels, boilers, cavity wall insulation and replacement glazing.
How will it work?
Homeowners will be offered a Green Deal Plan. This is a finance offer from a Green Deal Provider to install the recommended improvements. The homeowner will then repay the Provider over a set period of time.
The following parties will be involved in offering the Green Deal to the homeowner;
• Firstly, a Green Deal Assessor will attend the property and make impartial up front recommendations.
• Then a Green Deal Provider (big energy companies and SMEs) will make a finance offer based on the recommendations and will provide for the installation of the measures.
• Finally a Green Deal Installer will come to the property and input the measures at no upfront cost to the homeowner.
The repayments must meet the “Golden Rule” (Reg 30 Green Deal Framework (Disclosure, Acknowledgment, Redress etc) Regulations 2012 (the “Regulations”)). Firstly, the repayments must not exceed the savings resulting from the installed measures. Secondly, the length of the repayment term must not exceed the estimated lifetime of the improvements.
The respective energy provider for the property will be required to incorporate the Green Deal repayments within the utility bill.
What consents will be necessary?
Planning/ building consents: The accredited Green Deal Installers will be required to obtain any necessary planning and building consents.
Mortgagees: Mortgagees approve of the Green Deal measures but will require their mortgagors to notify them before taking on a Green Deal plan so that they can assess any potential impacts on their exposure to risk and the property’s valuation.
Landlords: Currently, a tenant must seek their Landlord’s consent to any alterations under the terms of their lease. However, by 1 April 2016, new regulations will prevent landlords of domestic Private Rented (PR) properties from unreasonably refusing a tenant consent to install energy efficiency improvements.
How will it affect property transactions?
Liability for the Green Deal debt attaches to the utility bill and the bill payer rather than to the improved property or the owner/tenant who installed the measures.
By the regulations, there is a duty on the seller to disclose the existence of the Green Deal to the new buyer/ tenant/ occupier before the first viewing. This can be achieved by providing an up to date Energy Performance Certificate for the property. An acknowledgment clause must also be included in the contract for sale, new lease or licence agreement (see Regulation 38).
If the new buyer/ tenant etc has no notice of the Green Deal Plan, they have 90 days to challenge the obligation to repay the Green Deal loan and disclaim any liability to do so. In these circumstances the debt will remain with the outgoing seller/ tenant and they will be liable for full repayment. There is no recourse outside of the 90 days.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.
For further information, please contact Andy Parker at
