Green Deal Provider
In the latter half of 2012 the government will seek to introduce a brand new initiative. The new initiative will enable consumers to plan, finance and install energy efficiency measures within their properties. The proposed initiative is being branded as ‘The Green Deal’. The Green Deal will enable property owners to conduct energy efficiency improvements without any immediate financial obligation.
The Green Deal is revolutionary in the sense that the finance provided will be linked to the energy meter of a property and not the individual(s) themselves. It is intended that the Green Deal will be made available to as many households and businesses in the UK as possible including tenants.
Within the overall scheme there are a number of steps that must be completed before installation can commence. The first is having a Green Deal Assessor inspect a property, once complete consumers are free to contact a Green Deal Provider. A Green Deal Provider is a private organisation that will provide the finance required, under the Green Deal initiative, to undertake energy efficiency measures. A Green Deal Provider, should they wish, can provide funding of up to £10,000 for consumers. The Green Deal Provider will then recoup the cost via the customer’s energy bill.
A Green Deal Provider will be responsible for tailoring the financial package to consumers needs. They will be responsible for agreeing to suitable packages, providing a quote for the total cost, the charge to be attached to the meter and the timescale in which repayments will be made. A Provider is not responsible for recouping the cost of the finance provided; energy companies are responsible for Green Deal repayments and passing on the money accrued back the Green Deal Provider.
There will be strict criterion and guidelines set out, to which a Green Deal Provider must adhere to. Located within the guidelines is the centrepiece of the financing structure, ‘The Golden Rule’. The Golden Rule states that planned improvements must not exceed the total potential savings on a property. In other words, the cost of upgrades cannot be higher than what could be saved. It is highly likely that, although an unconventional loan, the Green Deal financing structure will be categorised as a fixed term credit arrangement. Due to this a Green Deal Provider will have to operate within the Consumer Credit Act 1974. This means that a Provider will have to apply for a consumer credit licence with the office of fair trading before being able to become an established Green Deal Provider. The combination of guidelines and the Consumer Credit Act will help protect consumers from poor practices by a Green Deal Provider. A Provider must ensure that interest rates are kept low and payment structures are realistic and fair. This encourages as many people as possible to sign up to the initiative, but more importantly; it will ensure that the Golden Rule is achievable. Should a provider set interest rates too high, then the interest will cause repayments to exceed the expected savings.
For more information on The Green Deal please visitwww.blcpropertyservices.com/the-green-deal