It has now been four months since the launch of the Green Deal at the end of January and whilst interest in the ‘deal’ has climbed to c. 19,000 assessments at the end of April (Source: DECC) this is still small beer compared with the 14m or so homes which are the target for the scheme.
Stinging criticism has now been rained down from the parliamentary select committee on energy and climate change which accused ministers of failing to set clear goals for what they hoped to achieve from the green deal.
Tim Yeo, former Conservative minister and current chair of the committee, said: “It is unacceptable that, three years into the life of this parliament, ministers are unable to explain what success would look like from one of the coalition’s flagship policies.”
In view of the size of the housing stock, interest in the scheme will need to climb significantly more for the deal to even resemble a success but it will only be once these assessments are finally converted into Green Deal Plans and the works implemented will the true success of the initiative be known. The BBC Radio 4 programme, You and Yours reported on 7 June 2013 that the conversion of the 19,000 assessments had been fewer than 200 so the rate of conversion is at best only 1%. I suspect we shall be waiting some time yet before these figures rise…
In the meantime there remains a number of significant obstacles to its implementation. Here are some I have picked on.
Cost of loan – at around 7% over 15-25 years, the interest rate for the loan repayments, which you must remember are offset against the target energy savings, has been criticised as being too high particularly those with access to cheaper sources of finance via for example their mortgage. The key element of the loan is that it remains tethered to the house (or meter) so whilst the cost of finance may be higher it means home owners will not carry any debt if they move house. Anyone who is well settled would be well advised to seek a cheaper source of finance;
Cost of works – Only certified Green Deal Installers may undertake the works so there are genuine concerns that the cost of the works will be significantly higher than using your local builder. This coupled with the finance costs is likely to see the most active home owners doing their own thing;
Combining the works with other home improvements – Furthermore, given the works may not be undertaken by your local builder this creates added complexities where the works are being combined with broader home improvements. If this is likely then careful project management and co-ordination will be required;
Specification & monitoring of works – The provisions for specifying, monitoring and certifying completion of the works still remain opaque. This is particularly the case for solid wall insulation where the surveying community is concerned about the wrong insulation being fitted in the wrong way to older solid walled properties which inadvertently creates issues with interstitial condensation. To avoid such issues it is advisable that a building surveyor is involved to monitor the works and ensure that the nature of the works do not become an issue when selling the property;
Will the works actually save energy? – A frustration I have with the use of low energy technologies is that we put in low energy lighting but then run twice the number of lights. Net gain, Zero as the performance benefit has been exchanged for enhanced quality – Car manufacturers have been doing this for years – and the same is also true for lighting, wall insulation etc.. To compound matters many houses are underheated as the increasingly high cost of energy becomes a limiting factor so green washing of properties could actually see bills remain the same or increase as home owners heat & light the whole house as opposed to single room etc.;
Transfer of ownership – This is arguably one of the most emotive aspects and is likely to present issues particularly with the first properties to be sold with the ‘benefit’ of these loans for double glazing or solid wall insulation. The presence of a £60 a month loan on a £300,000 house will present a further excuse for a distressed seller to be held to ransom by a buyer. When these times do finally arrive it will be important for there to be absolute transparency over the details, all the details to be readily available, and the agents to pitch the loan in the right terms. If due care is not taken then chances are the buyer may insist on the loan being paid off prior to purchase.
Taking all these issues together it is no wonder take up has only been at around 1%.
The government which once laid claim to be remembered as the ‘Greenest Government Ever’ will have to do considerably more to interest home buyers with this initiative which alongside the Feed in Tariff controversy could very easily end up being another fiasco.
Julian Record is a Shropshire based chartered building surveyor and project manager who specialises in providing property and construction expertise within the residential and commercial sectors.