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More hurdles ahead for the Green Deal?

In January 2013, the Government launched the Green Deal, an initiative aimed at encouraging home owners to reduce carbon emissions and save energy – and this week they have published pitiful figures revealing that only four financing deals have been signed off in the Green Deal’s first quarter.

They also announced that only 241 further finance plans are currently pending.

However, as well as the difficulties in getting scheme applications approved, questions remain as to how it could affect the UK’s housing market.

Michael Storey, Solicitor and Property Specialist with Samuel Phillips Law Firm, said: “It’s clear that the Green Deal has not taken off as the Government expected, and there will no doubt be moves now to increase the take up. We will then see how the property market reacts, as the charge is technically linked to the property rather than the owner. It could potentially result in a two tier sale price, one price with the Green Deal commitment on-going, and the other with the Green Deal paid off early by the seller.”

The Green Deal allows property owners to pay for energy saving measures gradually through their utility bills and the savings made, rather than an upfront payment. The works that are eligible for the Green Deal include cavity wall insulation, solar panels, boilers, hot water systems, insulation, replacement glazing and lighting systems.

Mr Storey commented: “Understandably, property owners have been reluctant to invest in energy saving measures by upfront payment, as it can take so long to get their investment back. Furthermore, landlords have shown little interest as it is normally their tenants who pay the energy bills. This is a great initiative, but with the contract linked to the property rather than the person, there’s going to be some confusion if a property is sold on.”

The buyer would be alerted to the Green Deal commitment via the Energy Performance Certificate (EPC). The buyer’s solicitor will need to ensure the buyer is aware of the legal implications, including obligations to maintain the installations and termination provisions should the commitments not be honoured. Before completion, a disclosure document must be served on the buyer to ensure they are fully aware of what they are taking on.

Mr Storey concluded: “The Green Deal is designed to incentivise home owners to make improvements to their homes. While everyone is currently debating the low levels of take-up, it is also appropriate to look at how the benefits to the house could actually complicate the sale process. This could be the next hurdle the Green Deal has to overcome.”

Samuel Phillips Law Firm offers a comprehensive range of legal services to business and private clients.

This was posted in Bdaily's Members' News section by Emma Hignett, i2i Business Solutions .