What is the Green Deal?

A cloudy green haze

Sometimes knowing what to do can seem like peering through a green fog…

The Green Deal is a government scheme to try and take some of the sting out of making green home improvements. The state of the housing stock in the UK is pretty dire, so we certainly need to do something, but is a Green Deal loan a good deal for homeowners? Well, yes and no…

How does it work?

Basically you as a homeowner make a booking with a Green Deal Assessor. This costs about £100-150, but you can sometimes get it for free. The Green Deal Assessor will have a bit of a look at your house, check your bills and make a bit of a rough estimate of the energy efficiency of your house. Based on this they’ll make some recommendations for improvements you could make that will pay for themselves in fuel savings. That last bit is important, it’s the “Golden Rule” of the Green Deal. You pay for the improvements by taking out a Green Deal loan, and the repayments on the loan aren’t supposed to cost you any more than you pay now, it’s all paid for through the efficiency improvements. The loan repayments are taken automatically out of your electricity bill.

The Green Deal can be used to fund anything from extra insulation to new boilers, solar panels, heat pumps, etc.

The assessor will also advise you of any Green Deal cashback grants that are available to you, it’s often worth getting an assessment done just to be eligible for these, even if you have no intention of taking out a loan.

Should I take out a Green Deal loan?

I reckon it’s like this:

green_deal
You may notice that nowhere in this flow chart do I recommend getting an actual Green Deal loan. That’s for a couple of good reasons:

  1. The interest rates aren’t good. If you need to take out loan you can get a better deal from normal lenders like your bank or a building society. You’ll save money doing it this way.
  2. A Green Deal loan is tied to the property, so could make it difficult to sell your house. Buyers are understandably wary of taking on a debt incurred by someone else, even though the “Golden Rule” supposedly means they’d only be paying what they would have paid in the bills anyway.

So is the Green Deal pointless?

No.

Green Deal assessments are useful, they help people decide what they should improve. Adding more insulation and draughtproofing is very cost-effective, and almost anyone will benefit from improving it but a lot of people don’t realise this. A Green Deal assessment should spell it out. The fact is you don’t need to spunk megabucks on green bling to save money and cut carbon.

Also, having an assessment done frees up Green Deal cashback funding you can use to subsidise improvements. Even if you have no intention of taking a Green Deal loan, it can be well worth your money to get an assessment done.

 

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This page last updated 23 April 2014