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A Guide to The Green Deal for Estate and Letting Agents

11th February 2013

Now The Green Deal has been launched there are number of issues Estate and Lettings Agents should be aware of. To help we have created the following overview and FAQ covering the questions most relevant to Estate and Letting Agents:

What is The Green Deal?

The Green Deal is the governments flagship scheme to help reduce carbon emissions from building whilst also lowering the bills for the occupier.  It aims to make it possible for millions of homes and business’s to improve their energy efficiency at no upfront cost to them.

It will allow the installation of energy efficiency measures which will then be paid back by the occupier of the property through the electricity bill. The unique concept is that the finance stays with the property, so the repayments would be taken on by any new occupier.

The Green Deal also operates under the Golden Rule which states that the repayments should not be more than expected savings. This means that outgoings should not go up and so there should be no financial implication to having the work done. Once the repayments are complete the energy efficiency measure are owned by the property owner.

The existence of Green Deal finance is not recorded as a charge against the property but instead will be flagged on the Energy Performance Certificate.

I am an Estate Agent, how will it affect me?

The Green Deal will offer both an opportunity and a threat.

The threat comes from understanding how it is going to affect the sale of the property.  Firstly you will you have to be aware of The Green Deal so you can let the potential purchaser know upfront of its existence. Secondly the finance stays with the property so the new owner will have to take over the payments. Although there is a argument to say, due to The Golden Rule, that the cost of running the property does not change  it may well be seen as a straight loan to any purchaser and as such they could ask for it to be paid off or for an adjustment in purchase price to compensate.

There is also an opportunity from getting in early with a Green Deal Provider/Advisors to introduce Landlords or new purchasers looking to improve the property to the Green Deal whether this be for new revenue in terms of referral fees from the end installer or just to add value to your service.

I am a Letting Agent, how will it affect me?

The Green Deal will offer both an opportunity and a threat.

The threat comes from increased administration and negotiation. This is because any new tenants will have to take over The Green Deal repayments and as such will need to be made aware prior to taking on the tenancy. Also for any Landlord/ tenant wanting to take The Green Deal they will require the other permission unless it is in a void period.

Moving forward there are further implications from The Energy Act which suggest that from 2016 the Landlord will not have the right to refuse any reasonable request from the tenants to make improvements under The Green Deal. It also states in 2018 it will become unlawful to rent out a property that is not a band E or higher on the EPC. This could force the Landlords hand with regard to improvement.

There is also an opportunity from getting in early with a Green Deal Provider/ Advisors to introduce Landlords to the Green Deal whether this be for new revenue in terms of referral fees from the end installer or just to add value to your service.

How can occupiers get involved with The Green Deal?

The first step is to get a Green Deal Assessment carried out by a Green Deal Advisor. Many DEA,s who you may already have a relationship with, are also training to become Green Deal Advisors. Otherwise they can call the Energy saving advice Service on 0300 1231234.

The Green Deal advisor will make recommendations of improvements that are appropriate to the property and this is then taken to a Green Deal Provider. The provider creates a Green Deal plan which is essentially the financial agreement between both parties. Should the plan be agreed between the occupier and The Green Deal Provider then the Provider will arrange install and provide any follow up support.

Quick Reference FAQs

What is the Golden rule?

The Golden Rule states that the repayments should not be more than the expected energy savings, so the occupier should not be any worse of

Does it apply to both domestic and commercial properties?

Yes

Do landlords need the tenants permission?

Yes

Do tenants need the landlords Permission?

Yes

Will landlords be forced to take on The Green Deal?

Although not initially and landlords may well be forced to make improvements although not necessarily through The Green Deal. The Energy Act suggests that from 2016 Landlords will not be able to refuse reasonable requests for improvements from the tenants that are available under The Green Deal. It also states that from 2018 renting out a property with an EPC rating of G or F will become unlawful those in this bracket will need to be improved if possible

What improvements are included in The Green Deal?

  • Condensing boilers
  • Heating controls
  • Under-floor heating
  • Heat recovery systems
  • Mechanical ventilation (non-dom)
  • Flue gas recovery devices
  • Cavity wall insulation
  • Loft insulation
  • Flat roof insulation
  • Internal wall insulation
  • External wall insulation
  • Draught proofing
  • Floor insulation
  • Heating system insulation (cylinder, pipes)
  • Lighting fittings
  • Lighting controls
  • Innovative hot water systems
  • Water efficient taps and showers
  • Ground and air source heat pumps
  • Solar thermal
  • Solar PV
  • Biomass boilers
  • Micro-CHP
  • Energy Efficient Glazing and Doors

Are they all completely funded?

No, some measures will require a contribution upfront

Is there any financial support?

Yes, the sister scheme is ECO which can provide support for those on a low income and relevant benefits

Will it affect the property sale?

Possibly depending on the view of the prospective purchaser as to the outstanding repayments

Will it affect the property rental?

Possibly depending on the view of the prospective tenant as to the outstanding repayments

How do I know if a property has take part in The Green Deal scheme?

It will give details on the EPC

Can properties with prepay meters take part in The Green Deal?

Yes, although the payments would be collected as arrears payments would be.

If  you would like to stay up to date with the latest on the Green Deal please subscribe to our news updates using the form below:

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