The Hidden Costs Of The Green Deal

Anyone wishing to take advantage of the Green Deal to improve the energy efficiency of thier home should be aware of the financial consequences.
The expected financial savings must be equal to or greater than the costs attached to the energy bill, known as “the golden rule” .There has also been doubts cast over whether the central tenet of the scheme - a so-called "Golden Rule" whereby the cost of repayments never outweighs the savings on the bill - will actually be successfully implemented.

The scheme requires an assessment of £150 or more to determine what if any work can be done. The cost of this has been suggested to deter many people. The Government believes Green Deal loans will be repaid at a rate no more than 6.92%.
Further to these charges there will be an initial set up charge followed by a £20 annual fee, failure to repay a Green Deal will lead to disconnection of gas and electricity supplies. Recent surveys have found little awareness among the general public for the Green Deal. The high interest rates and charges of the scheme have been heavily critised.
If the loan is paid off early the entire interest for 25 years is the penalty to pay,this would arise due to the anticipated difficulty in trying to sell your home because any buyers would be put off by the increased fuel bills.
It is not yet entirely clear what kind of legal entity is applied to the Land Registry documentation to properties that have received Green Deal loans, or how the mortgage providers will treat those properties when the property is resold or remortgaged.

'Cheap Energy Club'

A new energy club which promises to keep its members on the cheapest gas and electricity deal by monitoring their tariff could finally shift the market in favour of consumers, according to its founder.

Martin Lewis, the consumer champion behind MoneySavingExpert.com, said that he hopes that the launch of his newest venture, The Cheap Energy Club (CheapEnergyClub.com), will encourage households who have been languishing on poor value deals to switch and save hundreds of pounds annually as a result.

The website will monitor users energy tariff to ensure that they are on the cheapest gas and electricity deal according to their usage and will alert members to a more affordable deal. If by switching, an energy customer can save more than a threshold they set – as little as £25 a year – the Cheap Energy Club will then move on to the new tariff and pay you £30 cashback.

“The energy market is broken, competition is failing, consumers are being shafted, and with continued price rises the underlying roar of dissatisfaction is growling louder,” said Mr Lewis.

“Many people are confused, scared or disaffected with the idea of switching energy. For a long time people have said to me ‘can’t you just do it for us?’. Cheap Energy Club is a step closer to us being able to say yes.”

full article

Surveyors warn of Green Deal pitfalls

The Residential Property Surveyors Association has raised concerns over the finance mechanism and the future risks for conveyancers, estate agents and homebuyers, following the Green Deal’s official launch.

RPSA chairman Alan Milstein said: “The Green Deal is a strong concept that could significantly help homeowners and tenants to reduce their energy consumption and as a result, reduce their fuel bills too.

“However, as the first Green Deal finance schemes come into place, our members have voiced a number of concerns about whether a Green Deal loan is actually the most cost-effective route for many consumers, while highlighting a number of risks for the wider property profession.”

Mr Milstein argued that the Green Deal may not be the best route for some homeowners. “With early repayment penalties and the uncertainty surrounding how having a Green Deal loan attached to your property will impact on the future saleability of the property, for many homeowners it may be advisable to look at alternative ways to fund any energy efficiency measures, which they plan to introduce.





full article

The Green Deal energy efficiency scheme

The Green Deal is a new government initiative designed to help households cut energy bills and carbon emissions by providing loans for energy efficiency improvements to homes.

To sign up, you will need to book an assessment for your home, typically at a cost of £80-£150 – although some firms are offering them for free.

You will then be visited by a Green Deal Assessor who will recommend improvements to your property and indicate if they will ‘pay for themselves’ through reductions in your energy bills. You can accept as many or few of these measures as you wish.

The scheme allows householders can take out 10 to 25 year loans to pay for the improvements. The repayments are added to energy bills with the intention that the improvements will lead to lower energy consumption, offsetting the extra cost.

Suppliers can also pass on a further setup cost of £63 for the loan, and annual operating costs of £20, to customers.

If you choose to switch energy companies then the loan will move to the new provider.
The loan is tied to the house, not the person, so if you were to move home the loan would be passed on to the new owners.

If you’re a landlord, you must get your tenant’s permission before you sign up, and if you’re a tenant you must get your landlord’s permission to sign up - this also applies to social housing.

The first people to take up the scheme can apply for cash back from a government pot, with sums varying from £10 to £1,000 available depending on the improvements being installed.

full article