Vegro Blog Counters Which? Report

29th May, 2013

Head of the DECC Green Deal team Tracey Vegro responded to a Which? magazine report claiming only 21% of people would consider buying a home with a Green Deal attached through the DECC blog. Vegro writes:

Reporting research by Which?, the Observer newspaper on Sunday 19 May suggested that homeowners could find themselves having to pay off Green Deal debt before they can sell their property.

Of course buying a home is expensive enough already, so if presented with a stark choice between taking or leaving somebody else’s debt, it’s easy to see why many people would opt for the latter. Yet to view the Green Deal in this narrow way is to dismiss the many benefits that an energy efficient home can bring – not least the point that many commentators are making – like-for-like, a more energy efficient home might command a higher market price.

As consumer champion Martin Lewis of Money Saving Expert put it (1): energy efficiency isn’t just about group hugs, sandals and saving the planet. While buildings account for 38 per cent of CO2 emissions, Martin is right – energy efficiency could save us hundreds of pounds a year on our energy bills. Just installing solid wall insulation on a typical three bedroom semi would save £270 every year – and that assumes no further increase in energy prices.

The Green Deal lets homes and businesses pay for some of the cost of energy efficiency improvements through savings on their fuel bills, and the golden rule ensures that the expected savings will be at least as big as the repayments, including interest.
When the occupant sells up and moves on, the Green Deal stays behind in the improved home. A vendor could pay off their investment ahead of a move, but at the same they will know they are offering an energy efficient and so more desirable property.

Green Deal improvements like a new energy efficient boiler and new windows will improve your home making it a nicer place to live and crucially, a home that has lower energy bills. That’s a marketable proposition and shouldn’t deter a potential buyer.

And don’t just take DECC’s assessment at face value. Many in the lending industry such as Nationwide, Santander and RBS Group have acknowledged the importance of the Green Deal in improving the energy efficiency and comfort of our homes. We have worked with the Council of Mortgage Lenders (CML), the Law Society and others to produce guidance to help ensure the Green Deal is well understood and smoothly integrated into business as usual transactions.

The Law Society has updated the Property Information Form for sellers to include a Green Deal question and this helpfully reinforces disclosure to the potential buyer. CML, keen to ensure mortgage lenders act responsibly, confirms the debt should be cost neutral.

I am optimistic that all of us will soon come to view investment in energy efficiency as value-adders in the same way we now do with other modernising improvements like a new kitchen or bathroom. From what the property professionals are saying, I’d go as far as to suggest energy saving home improvements through the Green Deal can be a help, not a hindrance, when people sell their home.

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