Will the new incarnation of the Green Deal fare any better than its predecessor? Richard Wald, barrister at 39 Essex Chambers, examines the issue and questions whether the new initiative will breathe new life into the scheme.
Greenstone Finance and Aurium Capital Markets has announced its acquisition of the business and assets of the Green Deal Finance Company (GDFC), as well as its existing loan book, with a principal value in excess of £40m. The acquisition is being supported by Honeycomb Investment Trust.
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What events led up to this transaction?
The Green Deal was launched by the government in 2013 to provide consumers with access to finance aimed at making their homes more energy efficient. The scheme effectively enabled customers to borrow money for energy efficiency improvements and then repay the loans using the savings from future energy bills. The loans are tied to the properties, so that payments are made by whoever is benefitting from the energy saving measures. It was axed by ministers 18 months ago, shortly after the General Election due to low take-up and concerns over industry standards. The GDFC assets and remaining loan book were sold for £40m to Greenstone Finance, a renewable energy investment vehicle and Aurium Capital Markets which specialises in financing deals in the energy and real estate sectors. The consortium was one of more than a dozen parties who bid to take over the GDFC.
What is the significance of this transaction for the Green Deal?
It breathes new life into a scheme that was once hailed as the biggest home improvement measure since the Second World War and a revolutionary effort to cut greenhouse gas emissions by fixing Britain’s notoriously draughty houses. The new incarnation of the Green Deal enjoys the advantage of lessons learned from its ill-fated predecessor, including excessive complexity, an unattractive loan interest rate (of 7%) and the concerns of many homeowners about letting installers into their homes.
The New Green Deal will seek to raise awareness of what is described as an attractive ‘pay-as-you-save’ concept that has worked well abroad and is not as expensive as many think. It promises to:
- boost the number of approved installers
- perform spot checks, and
- weed out cowboy operators
If all of this is done and seen to be done, the new scheme has good prospects of succeeding where the old one failed.
Would the New Green Deal need to be put in place from scratch or is it likely that the existing policy and framework be used?
The existing framework will be used. The new owners will continue to service existing Green Deal loans and will begin financing new ones by the end of March.
What are the practical implications for lawyers and their clients?
The restart of the New Green Deal has come at a time when the home energy efficiency market is preparing for an upsurge in demand as the Energy Efficiency Regulations 2015, SI 2015/962 (the 2015 Regulations) come into force in April 2018. After this date, it will be unlawful for landlords to grant a new lease for properties that have an energy performance certificate rating below E.
Landlords who fail to meet this standard (whether by availing themselves of the financing opportunities which exist under the New Green Deal or otherwise) may thereafter face enforcement action from the relevant local authority pursuant to Part 3 of the 2015 Regulations, including the imposition of financial penalties and a ban from the sector.
This Analysis was originally published on Lexis®PSL Environment. Discover how Lexis®PSL can help you stay on top of the latest developments and find the answers you need fast: click here for a free trial to access.
Interviewed by Evelyn Reid. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
Source: LexisNexis Purpose Built
The New Green Deal
