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The Green Deal

07 December 2011

The Green Deal provides a mechanism to help fund energy efficient refits of properties and is due to be available from autumn 2012. It is designed to improve the energy efficiency of buildings and reduce carbon emissions.

Electricity bill payers will be able to carry out certain energy saving improvements financed by businesses. The businesses financing the improvements will get their money back from electricity suppliers in instalments via the electricity bill.

The Green Deal will apply in England to both domestic and non-domestic premises. It complements other emissions reductions measures such as the requirement for energy performance certificates (EPCs) and the Carbon Reduction Commitment. 

The government has recently announced £200 million of funding to support the initiative.

The mechanics

If a property owner wants to take up a Green Deal, the property must be assessed by a Green Deal assessor, who will recommend suitable energy-efficiency measures.
 
A Green Deal provider then needs to consider the measures and, if appropriate, will offer the bill payer a Green Deal plan. An accredited installer must be used to carry out the works.

When the measures have been signed off, the customer will receive a Green Deal plan document and a new EPC.

Importantly, the obligation to repay will attach to the property, not the person who requests the works, so the liability remains with the meter. This means that there will be a duty to disclose a Green Deal plan on the sale or letting of a property. This will be done through the EPC.

The plan will require the bill payer to obtain any necessary permissions or consents, including planning permissions, building regulations consent and any landlord or mortgagee consent. There is also a golden rule that costs of any measures installed must not exceed the estimated energy bill savings during the term of the Green Deal finance arrangements.

Consultation

The details of the Green Deal are currently under consultation, with regulations expected in spring, coming into force in October 2012.

The consultation will address the detail of the scheme, including:

Landlords and tenants

The implications for landlords and tenants cannot be properly assessed until the full details of the Green Deal are finalised.

Issues will doubtless arise, for example, will landlords be able to refuse consent for energy-efficient measures where the lease prohibits alterations? How will tenant’s improvements be dealt with at rent review and on lease renewal?

There will be a review of the regulations and a report on their effect is to be produced before April 2014.

If the report finds a need for further action on energy efficiency, legislation may be enacted preventing landlords from letting properties with an EPC rating of less than E until specified energy-saving measures have been taken.

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Get in touch

Sophie Wilkinson

Associate
T: 03700 86 4012
I: +44 (0)121 625 4012
E: sophie.wilkinson@shoosmiths.co.uk