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Let's not kill the Green Deal with negativity before it's had a chance
Posted by Cathy Debenham on 28 January 2013 at 10:05 am
Today, at last, the Green Deal is open for business. I struggle to think of any proposal that's been so talked about (and so derided) before it even started. So it's not surprising that its launch has been met with a tide of negativity too: it's not ambitious enough say some. Others focus on the interest rates - which are too high. No one knows about it (in fact research shows that one in five people have heard about it - and that's quite a lot of people for something that hadn't started and hadn't been marketed yet).
At heart, the Green Deal is very simple. It’s a way of borrowing money to improve the energy efficiency of your home and paying it back out of the savings in energy bills that result (the commercial version will follow in due course). Unlike a personal loan, it's attached to the property, and will pass on to the new tenant or owner if you move before it’s been paid off.
The reality has become a bit less simple as layers of complexity have been added to adminster the loans and protect consumers. However, it's still a way to remove the barrier of up front cost, which often prevents people from improving their home. And it will be available for the privately rented sector too, where needs are often greater than other sectors.
At the end of the day, it aims to deliver a warmer, cosier home at no up front cost - and no increase in ongoing expenditure. This is an attractive goal, especially for people who don't have easy access to alternative means of borrowing.
Let's give it a chance. While initiated by government, it's run by the private sector. They want to make it work, and having spent Friday ringing round the Green Deal Providers (the organistations through which the loans are accessed) I found that there are a variety of ways in which GDPs are planning to work - both with consumers and with installers and assessors. This is just the start. The likelihood is that as consumer demand is better understood, the models of delivery will adapt and improve. We can only wait and see.
My guess is that the Green Deal will start slowly with boiler replacements and insulation for hard to treat and solid wall properties available through the Energy Company Obligation (ECO) where additional money is available to help out with the cost of this insulation.
Is it perfect? No. Is it ready for mass roll out immediately? No. Is it worth giving it a chance to see if it can help deliver the government's goal of making our housing stock less expensive to heat to a comfortable warmth. I'd say Yes, definitely.
Rates of interest for the Green Deal
On Friday, The Green Deal Finance Company (TGDFC) announced an initial interest rate of 6.96% per year. There will be a start up charge of £63, plus an annual operating charge of £20 payable by the Green Deal Provider (who may well pass it on to customers).
Green Deal Providers will be able to determine their own all-in package which they will offer to consumers. The indicative interest rate for all-in Green Deal Plans (loans) of £5,000 will be between 7.67% (over 25 years) and 7.6% for a 10 year plan. The rate will be higher for smaller loans – for example 9.3% all in for a £1,500 loan over 25 years.
According to TGDFC “rates will be comparable to the best high street rates for long-term unsecured loans. But whilst these are accessible to barely half the population, TGDFC will lend to over 80%.” Whether or not you think this is a good deal may well depend on your circumstances, and how easily you can access alternative forms of finance.
Green Deal Cashback
To help encourage take up, the Department of Energy and Climate Change is offering Cashback to the early adopters of the green deal. This is available whether or not you take up the green deal finance plan. You must get an assessment to qualify.
Getting started with the Green Deal
Step one on the way to getting a Green Deal is to get your home assessed. This is likely to cost you around £99 and most of the Green Deal Providers will refund that if you go ahead with a Green Deal Plan through them.
You can approach that in a number of ways: ou can contact a provider, you can approach a local, independent Green Deal Advisor direct, or if it’s something you’d like to use your usual plumber, builder or installer for you can contact them and ask if they are Green Deal accredited, and if they work with a local Advisor. Green Deal Advisors all have to work through a Green Deal Assessor Organisation. There are currently 48 accredited. Help is also available by calling the Energy Saving Advice Line on 0300 123 1234.By Cathy Debenham
If you have a question about anything in the above blog, please ask it in the comments section below.
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