Green Deal: What is it about?

February 27, 2014

Green initiatives have very significant attractions but there are already problems. As far as home owners are concerned, Green Deal improvements will impact on their property and be sold with the property, potentially giving rise to problems associated with home selling.  The “improvements” themselves may cause additional problems.

Many companies market green improvements, which mainly consist of solar panels, loft insulation, cavity wall insulation and new heating boilers.  However, in order to increase the amount of green improvement in the country, Parliament passed the Energy Act 2011, which has been described as the “flagship piece of legislation, which will deliver energy efficiency to homes and buildings across the land”.  The Green Deal is a complex scheme which is expanded by regulations.

The main feature of the scheme is that the improvement will be provided without any immediate payment by the home owner, but the cost will be recouped over a significant period of time by additions to energy bills.  The period for repaying the credit should be no longer than the estimated life of the improvement.  If homeowners wish to sell or otherwise transfer the property, the Green Deal plan must be disclosed to a prospective purchaser etc and there must be an acknowledgement by the buyer of liability to make payments and that certain terms of the plan are binding on the bill payer.

There are enforcement provisions such as sanctions, an ombudsman service and provisions as to compensation.

There is already widespread mis-selling. There are advertisements by claims management companies saying they might be able to recover the total cost of the system because of mis-selling in respect of solar panels. Salespersons are almost certainly likely to be rewarded with commission which is often an incentive for mis-selling. The major form of mis-selling will no doubt be the amount of money which can be saved by making the improvement. It is not simply a question of savings on energy but the effect of, in particular, solar panels on the property. A recent survey found that, if faced with a choice of two properties to buy which were almost the same, one in four people would opt for one which had solar panels. That leaves the other three in four. Undoubtedly many people will be attracted to a house with solar panels even though they will take over the obligation of repaying the credit on top of their energy bills. There will be others, however, who will not wish to have solar panels on their house and others may simply be put off by the technicalities.

There is the question of the quality of the materials used and the installation. There are already claims in respect of solar panels. If solar panels are not installed properly the loft will get wet. Concern has been expressed as to the effect on the interior of a property in some cases where cavity wall insulation has been installed.

Whilst nothing should detract from the great desirability of energy saving, the scope for unfair commercial practices is significant.  Further, there is the “golden rule” that savings should better the amount of the payments, but this has been queried in a House of Commons library paper because of the likely high interest rates.  The matter is perhaps summed up by an OFT report on home insulation to the effect that there are:-

“Potentially aggressive and misleading sales techniques and concerns over the quality of products and services.”