How The Green Deal Effects Landlords

How The Green Deal Effects Landlords

Date Published 19 June 2014

The Green deal has come into effect as of 1st October 2012. This will allow property owners to upgrade parts of their property with energy efficient measures. This will be given as a loan but must be offset by the savings made.

There should not in theory, be any increase of the occupiers bills, as they will be using them more efficiently.

To make it even easier, the charge will be listed next to the cheaper utility bill, which is paid as one bill. Note no new version of the Utility bills have come in as of yet, as the first loans are not expected to be granted till 28th January 2013.

Example of rough process
Property A - has a tank water heater from the 80s
Gas Annual Spend £1500 per Annum

Assessor states by replacing the old heater for a Combi Boiler, at a cost of £2500, Property A, will use approx £300 less gas per year

Boiler Lifetime expectancy -10 Years
£3000 saving will be made over this period which is greater than the install cost of boiler, thus loan is granted for install

Bill then presented to property owner:-
Annual Gas £1200, Annual Green Deal Loan £250, Saving £50 per Annum

So technically some saving can be made for the occupier, but the Green Deal allows up-to the exact saving, to maximise budget for green installs. It seems the Government have stated that this will increase employment and have an overall economical benefit. The main focus is to drive down carbon emissions, as eventually we will feel a bill from international carbon tax.

At a recent Landlord presentation by the Guild of Landlords, a few good points was highlighted, they are as follows:

The loan is not person linked, a charge will be applied against the property, the new occupier, be owner or tenant, will be expected to pay this charge.

New terms of acknowledgement and prescribed disclosure agreements have to signed by the Tenants. Applicants will have to be presented Disclosure prior viewings.

As of 2018, EPC rating of E or below, will be unlawful for tenanted properties

Tenants will be able to request consent for energy saving measures, and no later than 2016, a landlord cannot be unreasonable, in withholding consent. A tenant can still request now, but at the moment a landlord can just say no at their own discretion.

Any void period or if no electricity is used, then the Owner, will responsible for the charge. (unless lease more than 7 years)

If consent from the tenant is not obtained, the secretary of state can order the owner (improver) to pay the charge per month.

In theory Solar Panels, Double Glazing, pretty much any energy saving device can be paid for by the grant loan thingy, just one golden rule, the loan cannot be greater than the savings made for installing the measures.

It is expected that Landlords will take up these measures, as it improves the home, and it is cost neutral. If the landlord follows all the rules, of informing the Tenant, the Tenants are bound by Law, to pay for the charge as part of their energy bill.

How will this effect resell value, the logic dictates, that properties with these charges, should be cheaper than equivalent properties with same measures, by the balance outstanding of the charge.