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The Green Deal Mythbuster

Help towards energy efficiency

It's called the Green Deal. But in reality, it's a way of paying for the cost of double glazing, solid wall insulation, boiler upgrades and much more from the projected savings you'll make on energy bills.

It's complex, but for many living in England, Wales & Scotland it could pay off very well. This guide explains how it works, what it's best for, who should use it and more.

 

The Green Deal gives special 'loans' or grants to improve your home to cut energy bills. You needn't be on a low income - anyone can apply

Energy efficiency isn't just about group hugs, sandals and saving the planet. It can save you £100s each year on your gas and electricity bills and, just as importantly, make your home a more pleasant place to live in.

It's a debt, Jim, but not as we know it. For many, it won't ever increase their monthly costs

It's been billed as a loan, which will, wrongly, put many people off. Yet it's not a debt in the traditional sense:

You should never have to repay more than you 'save' in reduced energy bills

This is the most important thing to understand. So let's labour it a little bit. You only have to repay what you're predicted to save on your energy bills each month.

The Green Deal can be used for 40+ improvements, from double glazing and boiler upgrades to underfloor heating and loft insulation

Cash is on offer for a plethora of energy-efficiency improvements, a bigger list than than under previous schemes.

To get the Green Deal, you need to pay an assessor about £120 to visit your home. So do a speedy home check-up first

House survey with tick inside

Okay, to be eligible for this, you're going to have to shell out upfront.

The Green Deal Home Improvement Fund is to give out an extra £100m for insulation, double-glazing and more - after closing suddenly in July

In June a new 'Home Improvement Fund' element was added to the Green Deal to try and kickstart the scheme. It was massively popular - as it offered cash handouts of £1,000s to help you improve your home - and the money ran out at speed.

The sudden closure in July was handled badly and we kicked up a fuss. Now the Government's putting another £100m in, and you'll be able to apply within the next few weeks.

Full details aren't out yet (we'll let you know when they are), but we expect it won't be as juicy as before - previously you could get up to £7,600. We expect the structure will be similar but with lesser amounts. Applications will open before the end of November, though an exact date is yet to be announced (see the Green Deal fund to reopen with an extra £100m MSE news story).

Click to see full details of what was on offer before the fund shut

Already paid for an assessment? You CAN still apply. The closure of the fund was a shambles, as many paid upfront for assessments to do this, then weren't able to apply for the cash (see the Green Deal 'shambles' MSE news story). We campaigned (and Martin ranted on TV & radio) about this and asked the Government to re-open it.

The good news is those assessments are valid for two years, so if you had one done, you can use it to apply when the fund re-opens.

The people who'll benefit most from the Green Deal are higher users who live in cold houses and worry about turning the heating up

Sadly, many people feel squeezed by heating costs, and cannot afford the simple home improvements needed to cut their fuel bills.

The loan is attached to the home, not you. If you move, the next owner pays.

The loan is attached to your home's electricity bill, not you. So if you sell or rent it out, the new occupiers will make the Green Deal payments through their bills, in exactly the same way as you do.

If you've got the upfront cash, you can still get the Green Deal without the loan, including 'cashback'. This can be bonza

The loan is designed to help people who don't have the upfront cash to pay for improvements. Green Deal loans run for decades, and the interest costs can soon mount up. If you can pay upfront, you can avoid interest costs and bag the savings yourself.

You borrow over the long term (10–25 years), and there is interest attached

If you choose to get a Green Deal loan, the effective minimum repayment period is 10 years, the maximum 25. The exact length depends on the energy-efficiency improvements you choose.

The Green Deal won't cover pricier repayments' entire cost - you may have to stump up some cash upfront

If an improvement won't pay for itself in energy savings over 10 to 25 years, then you can't borrow the full amount through the scheme. So you'll have to stump up any remainder. Improvements that fully pay for themselves are denoted by a green tick on your assessment, those that only partially do have an orange tick.

On a low income, in receipt of benefits? You may be entitled to free cash rather than a loan

You don't always need to borrow. Launched alongside the Green Deal is the Energy Company Obligations (Eco) scheme. This gives grants to help low-income households, people living in older properties and low-income communities.

Everyone gets up to £6,000 to help with the costs of solid wall insulation

Some 6.6 million homes in Britain – that’s almost one in three – were built with solid rather then cavity walls. Unfortunately solid walls are much more expensive to insulate – but the good news is that anyone with solid walls is potentially eligible for grants worth £1,000s.

If the savings you're predicted to make don't happen, you could pay more than you actually save

Jar full of coins

This is a slight wobbler. I wouldn't let it put you off too much, but it is a risk that needs thinking through. Throughout this guide, we've written "you only repay what you should save", yet technically, that's not always true. The actual savings need to match up with your total repayments.

Get at least three quotes for the work and don't be afraid to haggle (you only need one assessment)

Picking a provider can be tricky. You don't need to get the work done by the same company that did the assessment. Many assessors and installers are salesmen - Green Deal double-glazing is still double-glazing!

Combining improvements can, bizarrely, make Green Deal loans more affordable

The most important thing to understand on this is that you cannot borrow more under the Green Deal loan than what your energy savings will allow you to repay.

Even though you repay the bill through your electricity provider, you are still free to switch provider to cut costs

Energy Club Logo

Repayments are taken from your electricity bill (because not everyone has gas) and will be shown on your statement. Your electricity supplier will repay your loan for you to the company who installed your Green Deal measures to pay off your finance.

If it breaks after the warranty runs out, you may still have to repay

Most Green Deal equipment comes with a five-year warranty for the equipment, and 10 years' warranty for any building damage caused by the installation. Cavity and solid wall insulation have a full 25-year warranty.

The Green Deal has STRONG consumer protection rules. If you're given the wrong advice, take it to the Ombudsman

green deal

There's a lot of consumer protection around the Green Deal. Green Deal providers, assessors and installers have all signed up to a Code of Practice, and all Green Deal home improvements should have the Green Deal Quality Mark.

The Green Deal's a big move. First ensure you're on the cheapest energy tariff and do the energy-saving basics

Ditch and switch energy provider and you can £100s a year. Our Cheap Energy Club checks you're on the cheapest deal and handles the switch for you. Plus to encourage you, there's usually up to £30 extra if you switch via the club.

Martin's final thought - is it worth it?

That's the mythbusters done, so hopefully you now understand how the scheme works.

Deciding whether it's right for you depends on your home and finances. From a purely financial perspective, provided the work qualifies for full financing, it seems a good bet for those keen to improve their pads who can't afford to shell out upfront for major improvements.Martin Lewis, site founder and editor

The simple reason for this is that your home will be a nicer, warmer place to live in, even though you won't have to pay out any more than you do now. But if you can afford to shell out upfront, then it's likely better to do this, so you don't pay any interest costs.

For smaller improvements the assessment's cost is proportionately larger, so needs factoring in more. Though, right now, with cashback on top, that should be more than covered, making that simple too.

Those are the easy bits though. This is a new-ish scheme and there are still many unknowns, even though we're now almost two years in. We don't know what impact this'll have on house prices, for example. So there is still an element of a gamble.