Homeowners can once again apply for Green Deal loans to make their property more energy efficient, after private investors took over the scheme – though only a handful of providers are so far offering the loans.
The Green Deal Finance Company has this week begun providing new loans for improvements including boilers, insulation and renewable heating systems.
Under the Government's original scheme, homeowners could benefit from 45 energy-efficient home improvements at no upfront cost through Green Deal loans, repaid through the property's energy bills.
Not all these improvements are available in the new scheme, however, though the company hopes to finance all 45 in future.
For full info on the previous scheme, see our archived Green Deal Mythbuster guide.
What was the Green Deal?
A flagship energy-saving scheme launched in 2013, the Green Deal allowed homeowners to make improvements at no upfront cost, and pay for it through savings on their energy bills.
So if your energy bills were £1,000 a year when you applied for the loan, your energy bill plus Green Deal repayments shouldn't have been more than that. But this didn't always work in practice, as some low users could have ended up paying more as they used less energy than average.
Not only that, but as the loan was attached to the home, rather than the person applying, there were fears it could make a property difficult to sell.
In July 2015, the Government pulled the plug on the scheme, due to low uptake – only about 15,000 Green Deal loans were issued over the two-and-a-half years the scheme was open.
There are different loan lengths under the new scheme
This week's announcement is a 'soft launch', so Green Deal loans are unlikely to be widely available at present – though the Green Deal Finance Company is looking to add more providers and improvements over coming months, before a full launch later this year.
The scheme is, however, expected to work much the same as the previous scheme:
- The homeowner pays the money back through their electricity bill.
- Companies authorised to provide finance are responsible for offering the Green Deal to customers, based on recommendations from assessors. They also arrange the improvements' installation, deal with customer complaints and provide information to any new bill payer that moves into a property with a Green Deal.
- The Green Deal loan APR charged to customers is expected to be 9.5% compared with an average of 8.3% previously.
- The loans' duration under the new scheme is for the products' expected lifetime – eg, the company expects boilers to last 12 years, so the loan has a 12-year lifespan. Under the old scheme, repayment periods were between 10 and 25 years, depending on the energy-efficiency improvement.
- It's worth noting some products may not last their 'lifetime' so we're checking what would happen to your repayments.
- Under the old scheme there was a chance the costs would outweigh the benefits in some circumstances, if your energy savings didn't cover the loan. We're still checking how this would work with the new scheme.
- The Government has confirmed that the new scheme will be covered by the same regulations as previously.
- Strong consumer protections will remain in place, with all providers, assessors and installers to adhere to a code of practice. Plus, if something goes wrong you can take your case to the independent Energy Ombudsman, the Financial Ombudsman Service or Trading Standards, depending on the problem.
Similar home improvements are also available through grants under the Energy Company Obligation (ECO) scheme. These are typically available if you get certain benefits – so if you think you may be eligible, this is likely a better option. See our Free Insulation and Boilers guide for more.
How do I sign up for the new Green Deal?
At present, the Green Deal Finance Company says its focus is on boilers, though other improvements are available, such as heat pumps (which take heat from the air or the ground to warm homes).
If you're thinking of installing insulation in your home, you need to be particularly careful with cavity wall insulation as we've heard of a number of cases where it's been installed in unsuitable properties under the ECO scheme (or Affordable Warmth in Northern Ireland) – resulting in major damp problems.
Problems tend to occur in areas where property is subject to severe wind-driven rain, which can lead to water leaking in to the cavity. These conditions are most likely to occur in the west of the country, including the west of Scotland, Wales and Northern Ireland, and parts of Cornwall, Somerset and Dorset. For more info on what to do if you have problems, see our Free Insulation and Boilers guide
- To register your interest in the new Green Deal offer, submit your details on its website and, if available, a local Green Deal provider will contact you.
What if I already had a Green Deal loan?
If you've a pre-existing loan with the Green Deal Finance Company, nothing changes with this relaunch. Loans will continue as normal, and you'll still pay it off you through your electricity bill.
Will the Home Improvement Fund be available again?
The popular Green Deal Home Improvement Fund was a Government scheme designed to help with the costs of installing 14 of the most common energy-efficiency measures – such as boilers and double glazing – before it ended in September 2015.
Up to £5,600 per household was available under the scheme as cashback, depending on the measure.
There's no indication the Home Improvement Fund will be re-opened. We've checked with the Government on whether the new Green Deal opens up the potential for this scheme to relaunch, but we've yet to hear back.
'First step of making loans accessible to homeowners'
Kilian Pender, CEO of the Green Deal Finance Company, said: "We are extremely pleased to announce the relaunch [of] the Green Deal scheme and Green Deal loans. Since acquiring the business in January, we have received a significant amount of support from Government, energy-efficient focused organisations, manufacturers and installer organisations amongst others, all of who are eager to see the scheme continue where it left off and build further momentum."