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Does the Green Deal offer value for money?

Does the UK’s Green Deal scheme offer value for money? This detailed FAQ review responds to typical concerns about Green Deal loans, providers, eligible measures, redress if something goes wrong, avoiding cowboys and more. Note: In July 2015 the UK Government announced it was ending the Green Deal. Although some work under related workstreams continued into 2016, Green Deal Finance is generally no longer an option for homeowners. To April 2016 no replacement scheme has been announced.


Index

What is the Green Deal scheme?
What is the Golden Rule contained in the Green Deal?
What interest will be payable on a Green Deal loan?
What role does the Green Deal Provider play?
If I want to use my usual builder, can I still get Green Deal finance?
How do I know that my Green Deal installer is not a Cowboy?
What happens if something goes wrong with my Green Deal installation?
What happens if I sell my house?
What happens if I want to switch supplier to get a better tariff?
Will I definitely save money with the Green Deal scheme?
If I can retrofit my house without a loan, should I still take the Green Deal?
What are the pros and cons of greening my home today?
So what can I actually have done under the Green Deal?
Someone said that I could get a subsidy, is that right?
What if I rent my home, am I excluded?
It sounds as though some of the things I want to do will require planning permission, is that right?
What if I have had an assessment, but now cannot find a Green Deal Provider?


What is the Green Deal scheme?

It would have been nice to start off with an easy one, but the answer to the question ‘what is the green deal?’ will depend on who you are. The Green Deal is an ‘innovative financial mechanism’; it is a scheme which allows homeowners (and tenants) to install energy efficiency measures with ‘no up-front cost’; it is a way of protecting yourself against fuel price increases. It is all of these things.

The Green Deal is basically a Government backed scheme to help people to renovate/refurbish and retrofit their homes. With rising fuel prices, over 3.5million people living in fuel poverty and some legally binding carbon reduction targets the Government desperately needs us all to start cutting our fuel use.

The scheme allows homeowners and tenants to have an independent generic assessment to work out which measures would be most suitable to their homes. The assessment will calculate the potential savings. A further bespoke assessment will be done which will indicate more accurately if an individual home will be able to realise the savings. A Green Deal Advice Report (GDAR) will be formulated which will show the measures which could be undertaken, the indicative cost range and an idea of possible saving. This report, just like a prescription for a home, can then be taken to a number of different Green Deal Providers for quotes, leading to a fully costed Green Deal Plan.

The Green Deal officially launched to the public in January 2013, but it is likely to be a while before it gets fully geared up and then it is likely to have quite a long shelf life, probably at least ten years. There are an awful lot of homes that need to have this work done, so it will need to be around for quite a while!

Related:
May 2012: 3.9 million UK households in fuel poverty
June 2010: 14 million homes could benefit from green deal

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What is the Golden Rule contained in the Green Deal?

Bear with me, although this is a reasonably simple concept it isn’t that easy to explain in writing. Basically it means that the amount you pay should be less than, or equal to, the savings that you could make.

An assessor will work out what measures can be installed in your home. He will provide an EPC for your home which will show the measures with an ‘indicative cost’ range, a ‘typical saving over 3 years’ and a tick to show whether the measure is ‘available with Green Deal’ financing. There will be green ticks if the measure would fall fully within the Green Deal and an orange tick if you may need to fund some of it yourself. So, those with a green tick are said to fit the Golden Rule. These are all based on Standard Occupancy.

The assessor will then undertake an occupancy assessment where he will ask if you have different occupancy than standard, he will ask about the temperature that you keep your home at, whether you work from home, whether you have big energy sapping devices that wouldn’t be in a usual home (perhaps a pottery kiln). All of these factors will be used to create a report which is bespoke to you and your home. This report is used to let you know whether you can expect to make the savings indicated in the original EPC.

If you are a particularly low energy user (perhaps you have your thermostat set at 17C, or maybe you work away from home all week) then it is unlikely that you will be able to realise the savings. Of course the opposite is true too. If you are a very high user you are likely to get bigger savings than predicted.

Once this second assessment is created the assessor can discuss with you which measures you are likely to undertake. He or she can run a number of scenarios and eventually will print off a Green Deal Advice Report.

This report can then be taken to different Green Deal approved installers or Green Deal providers for quotes.

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What interest will be payable on a Green Deal loan?

The amount of interest that the Green Deal Finance Company (GDFC) will lend at has now been announced as 6.96%, but this is effectively the rate at which the Green Deal Provider (GDP) borrows the main loan for the measures.  If you choose to include the set-up fee or annual fees in your loan then you may pay a bit more than this.  Remember this is effectively an unsecured personal loan which will be available to over 80% of the population, so this rate is very competitive when compared to what these people could access normally.

Homeowners will need to decide whether they would be better off by putting the cost of measures on to their mortgage (which may have a lower interest rate).  Some people will use savings to pay for the renovations (with bank interest on savings at historically low rates this may be a cost effective use of the money).

The rate of interest will be fixed which should make it easier for improvers to budget over the years.  However this doesn’t mean that the amount you pay will stay the same. The amount is allowed to be increased by 2% each year, in lieu of fuel inflation.  Although at present no GDPs intend to use this option and the GDFC is not set up to process it.

Also the amount you pay could vary depending on the products that have been installed.  The length of time of the Green Deal payments will relate to the length of time that the measures are expected to work.  So it would be possible to pay for loft insulation over a very long term, perhaps 25 years, whereas a boiler is more likely to be paid for over five to ten years.  So if an improver (that’s the person signing up to the Green Deal) were having these two installed as part of a full package of measures it is likely that the initial Green Deal Charge would include payments towards the boiler, but after a first initially higher period the charge would then drop to a lower amount for the remaining 15-20 years.

Related:
Mar 2013: Example cost of Green Deal used to support Solar PV installation
Jan 2013: Green Deal interest rates will vary from 6.96% – 9.34%
July 2012: New law to allow homeowners to borrow up to £10k at 7.5%

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What role does the Green Deal Provider play?

The Green Deal Provider is the route that all monies will flow through. They will arrange the finance for you and pay the installers. They will tell your electricity company to collect the money from your bill and they will agree how much and when it should be taken. They will also be your first port of call if there are any problems.

To become a Green Deal Provider the company (retailer, energy company, merchant, social housing provider etc) must go through a detailed and lengthy process of accreditation. They must register with the oversight and regulatory body and adhere to specific codes of conduct. It is quite an onerous process and won’t be undertaken lightly.

I like to use the analogy of having your eyesight tested, getting a prescription and getting glasses to explain the Green Deal.

Firstly you know your eyesight is poor, or your home is inefficient. You get an independent eye test, or house assessment. The assessor provides written advice, a prescription. This is what you will need to refurbish your home, or improve your vision. You can take that prescription to a different shop, or you can usually order your glasses from the same place that did your sight test.

We expect that the person who carried out your independent assessment may also be able to provide a quote for the works, but you may want to shop around for what suits you best.

Finally someone makes up your glasses, or does the work in your home. In the case of the glasses you don’t usually get to meet the actual manufacturer and you don’t pay them, in the same way that you won’t pay the actual installers.

You will pay the Green Deal Provider who will do all the processing for you. If you have a problem you will go back to the Provider (optician) you wouldn’t normally go to the manufacturer of your glasses.

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If I want to use my usual builder, can I still get Green Deal finance?

Another hard one to answer. Yes, you should be able to, the government really wants to encourage Small and Medium Sized businesses (SMEs) to be involved in the Green Deal. Your usual builder will, hopefully, have partnered with a Green Deal Provider and should be able to access the Green Deal Funding. This also means that where your usual plumber may be able to upgrade your boiler, he may now be able to put you in touch with the insulation installer via the Green Deal Provider so that you can have the package of measures installed at the same time.

Of course it is possible that your builder doesn’t have a link with a Green Deal Provider and therefore you won’t be able to use him to do your renovations.

All installers will need to be specially qualified to install Green Deal measures.

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How do I know that my Green Deal installer is not a Cowboy?

This is just about the easiest question. A qualified and accredited Green Deal Installer will be able to use the Green Deal Quality Mark. You can think of this like the ‘kite mark’ it is a way of knowing whether your installer has the right qualifications and has signed up to the stringent requirements of the Green Deal Code of Practice.

Related:
Dec 2010: No place for cowboys in the Green Deal

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What happens if something goes wrong with my Green Deal installation?

Your first step is to approach the Green Deal Provider who provided the works for you. If you don’t get a satisfactory resolution then you should be able to go to the Ombudsman.

DECC have appointed Gemserv to provide the Oversight and Registration Body (GDORB).  You can find out more on their site .  They are responsible for ensuring that the quality mark is used correctly and that code of practice adhered to.

Also remember that you will have insurance or warranties on both the work and the products – five years for most products but 25 years for solid wall insulation. You will also have additional cover should there be any consequential damage – 10 years.

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What happens if I sell my house?

One of the main facets of the Green Deal is that the charge stays with the home rather that the owner. So when you move the new owner will take over paying the charge when they pay their electricity bill. Of course they will benefit from the measures that you installed, but they won’t have to ensure the upheaval or disruption. They won’t have the hassle of finding installers or choosing measures.  They will just pay the charge and have a warmer home.  This means that they should be happy to take on the charge.  This may be another reason why a homeowner may want to take out a Green Deal, rather than paying for the measures themselves – they can leave the debt behind.

Related:
May 2013: Selling your home with a green deal

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What happens if I want to switch supplier to get a better tariff?

You can still use comparison sites to check what rate you are paying and you can still switch tariff and supplier, but there are some suppliers that you won’t be able to switch to. This is because some of the smaller suppliers just won’t have the administration facilities to collect the additional payment.

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Will I definitely save money with the Green Deal scheme?

No. This really isn’t about saving money now. It’s about protecting yourself against rising prices in the future; making your home warmer and more comfortable to live in and helping to stop wasting fuel, which is a finite resource. Of course that should all lead to reducing carbon emissions from buildings too.

The Golden Rule isn’t necessarily calculated to save money. It may be that the savings and the cost are equal. It may even be that you need to put in some money up front because the measures that you want to install don’t fit the Golden Rule.

Some people will definitely save money, but it will depend on the measures, the current energy use and the cost of installation.

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If I can retrofit my house without a loan, should I still take the Green Deal?

The answer to this depends very much on how long you are going to live in the house. If you will stay in the home for a long time then you may be better off by paying for the measures yourself. Money in the bank is not getting much interest these days and fuel prices appear to be rising year on year, so if you have money sitting around you may be better off investing it in energy efficiency measures. That would mean that you could avoid paying any interest on money for measures.

If you are planning to move house soon then you may be better off taking out the Green Deal Finance and passing it on to the new occupier. This also depends on how you think a prospective buyer may see the additional charge. As this is a new scheme there isn’t any evidence yet of how this will play out in the property market. Will a charge on the meter make your home more difficult to sell, or will the installed measures make the home more comfortable and energy efficient and therefore more welcoming and valuable to prospective buyers? It may be that owners and tenants view the Green Deal differently.

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What are the pros and cons of greening my home today?

The first thing to remember is that if done well a Green Deal Renovation should make you more comfortable and cut carbon, it may save you money too. Back to that opticians analogy. When you buy glasses you are always concerned that you may get them cheaper elsewhere, you worry that they will go out of fashion and you will need to replace them in future or perhaps you worry that technology will improve and you will have laser surgery in the future. You will have similar worries about the Green Deal, but just like glasses it is usually better to get the problem sorted as soon as you can rather than continuing with an inefficient home, or poor eyesight.

Technologies may improve over time. Eg triple glazing is now common place. New technologies are often expensive at the outset. It is usually best to buy the best technology that you can afford at any time and start saving energy as soon as you can rather than waiting for a better technology to come along, or reduce in price.
Advice may change over time. Eg we used to recommend 270mm of loft insulation, many people now recommend 300mm as standard. Remember a bird in the hand? etc. The sooner you have your renovations done the sooner you can be warmer, the sooner you can start saving energy and the sooner you can reduce your carbon emissions
Products may become cheaper over time as we have seen with Photovoltaics recently. This is possible, but it is unlikely that we will see anything like the reductions that we have seen in PV. As above, it is usually better to make the savings as soon as you can rather than waiting for price reductions
Government policy may change – there may be bigger incentives in the future Yes, but the incentives may end or be reduced, as we saw with Feed in Tariffs and the Low Carbon Building Programme before that.
Fuel prices may reduce in the future It is always possible that fuel prices will reduce (maybe Fracking will become popular?), but it is much more likely that prices will shoot up, just like they did in 2011

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So what can I actually have done under the Green Deal?

There is a whole list of ‘measures’ that are eligible for the Green Deal, but you will only be able to have them done if they fit the Golden Rule.

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

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Someone said that I could get a subsidy, is that right?

At the moment there are cash back incentive payments.  The Government has committed money to these to help to kick start the Green Deal.  Once the first pot of money has been used up the amounts of these incentives will be reduced, so there is a clear benefit to getting in early.  The amounts can be found here.

You can see that if you had lots of measures installed these could, currently, add up to well over £1,000.  Remember to ask your Green Deal Provider to help you to apply so that you can access these whilst they are still high.

There is also some funding called ECO (energy company obligation).  At the moment nobody knows how much this subsidy will be.  There is a rather clever plan to ‘sell’ carbon savings in an Ebay kind of way.  This means that the value of those savings can go down as well as up.  If the value is high then big subsidies may be available and if it is low then the subsidies are also likely to be lower.

Effectively the energy supplies are obliged to spend £1.3bn on cutting carbon.  They can do this by paying others to make energy saving renovations, just like they have been doing recently with free loft and cavity wall insulation.  Unfortunately those kind of measures aren’t likely to be free in the future for most of us, but there should be funding available for Solid Wall Insulation, for people who live in the most deprived areas of the UK and for those on the lowest incomes.

Rather confusingly some measures will only get the subsidy if you have other measures installed at the same time and some measures will only be available under the subsidy, like boiler repairs.

The Green Deal Provider who gives a quote for the work should be able to access these subsidies and show you how to apply for any additional incentives, or even apply on your behalf.

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What if I rent my home, am I excluded?

One of the great things about the Green Deal is that the Government has designed it for tenants and landlords too.  You both have to agree to the measures, then it’s just a case of deciding who signs for and organises the work.  Just like homeowners, if you are intending to stay in the property for a long time and benefit from a warmer home and potentially lower bills then it may be worth you doing the leg work, choosing the provider and, of course, getting those incentives.

Alternatively if your landlord gets the work done then you may want to try to negotiate a little of the cashback in exchange for you putting up with any disruption caused whilst the works are carried out.

In the longer term the government expects that landlords will improve homes in between tenants.  Then the landlord will need to tell the new tenants that there is an additional charge on the home (this is called disclosure).  The government expects the new tenants to be happy to accept this additional charge as the property they are moving into will be more energy efficiency after the measures and therefore the expected fuel use should be lower.

NOTE: There have been some issues with getting the Green Deal legal processes agreed and
sorting this out for tenants seems to have been even more problematic than sorting it out for owner occupiers.  It looks as though there won’t be Green Deal Plans that can be signed by tenants for some time yet, so unless your landlord wants to undertake all the measures
and pay for them you may have to wait a little longer.

Related:
DECC advice for landlords entering into Green Deal plans during void periods

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It sounds as though some of the things I want to do will require planning permission, is that right?

Some of them might, but not all. The Government has recently provided some additional clarity on the classification of solid wall insulation.  This will now be viewed as an ‘improvement’ rather than an ‘extension’, which means that in many cases it will become part of permitted development rights.  So, if your home is not in a conservation area and not a listed building then you should be able to install solid wall insulation without planning permission.

Of course if you live in a conservation area or your home is listed then the rules a bit different.  The definition of a conservation area is ‘an area of special architectural interest, the character or appearance of which it is desirable to preserve or enhance’.  Although conservation areas may seem restrictive in many places they have been able to prevent the proliferation of cheap UPVC, satellite dishes and unsightly dormer windows.  Love them or hate them, conservation areas are here to stay.

If you are in the conservation area you will need to apply for permission.  It is very likely that you would not get permission to put external solid wall insulation on the front of your property, but you may get permission to put it on the rear.  So you would need a combination of internal at the front and external at the back.  You may also have issues with double glazing and door changes.  There are options here will may still be ok, such as Slimlite glazing or Vacuum glazing.  It is also possible to find energy efficient doors which are still in-keeping with the age of your home.

Always check with the planning department before making any changes that you would not want to have to undo!

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What if I have had an assessment, but now cannot find a Green Deal Provider?

As mentioned elsewhere, there have been a good few issues with getting the legal frameworks in place.  It isn’t an easy process as there are so many different bits of legislation which all need to work together, for example the Energy Act, the Consumer Credit Act and the European Credit Directive.

There are also many different Government departments who each have responsibility for part of the process, Office of Fair Trading, OFGEM, HMRC etc.  On top of all of that the Green Deal Providers have had to go through the authorisation process with the Green Deal Oversight and Registration Body (GDORB) and then access finance via the Green Deal Finance Company (GDFC).

Although all of this has taken a long time the Government’s view has been that it is better to be right than be quick.  There are now Green Deal Providers able to provide GD Plans to owner occupiers and more are getting there every day.  If you are looking for a Green Deal Provider who is able to provide you with a plan you can check the GDFC website.  Or check the GDORB website and ask the Provider when they think they will get through the process.

It is taking time, but it will be worth it in the end. Green Deal is a long term project to retrofit 14 million homes.

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© Gabby Mallett, Head of Green Deal and Communities, National Energy Foundation
Last Updated Jan 2013

Also See:
Should I Green Deal with it?
Green open home events around the UK

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