Legal news
Less than a Year to Green Deal - 6th January 2012
The Energy Act 2011 – Less than a year to Green Deal
On 18 October 2011, the Energy Act 2011 became law. The Act implements the Green Deal, the government’s new energy efficiency initiative, which eliminates the need to pay upfront for energy efficiency measures. The scheme will enable occupiers of domestic and non-domestic premises and private sector landlords to receive finance from accredited providers for cost-effective energy efficiency improvements (such as loft insulation or heating controls), at no upfront cost. The financial framework will be supported by an accreditation scheme of installers, assessors and approved measures. Essentially, the Green Deal creates a new legal mechanism allowing the obligation to repay the costs of energy efficiency measures to attach to the property’s energy bill, rather than to an individual, and thus requiring energy suppliers to recover the Green Deal’s payments through the energy bills. The obligation to pay will pass to the new occupier or bill payer should the applicant of the Green Deal move away.
The scheme will be available to homeowners from October 2012.
The standard Green Deal measurements will not be appropriate for every property. It will depend on a number of factors, including the energy efficiency improvements already undertaken and the characteristics of the building.
For a Green Deal measure to be eligible for finance under the Green Deal, it must meet the “golden rule” which provides that the expected financial savings resulting from installing measures must be equal to, or greater than, the cost of repayment over the term of the Green Deal plan.
The seller, or prospective landlords, or licensors, will be required to provide details of a Green Deal plan free of charge to any prospective buyer, tenant or licensee.
When a property with a Green Deal is sold or rented (or when a licence to occupy is issued) the seller or landlord must disclose the Green Deal to the potential buyer or tenant and then obtain from them an acknowledgement to confirm that they will be liable for the Green Deal charges payable through the electricity bill. A failure to do so will allow the disgruntled buyer or tenant to complaint to the Green Deal Provider and the relevant ombudsman. If the case is proved, the person who failed to secure an acknowledgement will be required to pay compensation to the provider. In practice the Green Deal will be disclosed using the Energy Performance Certificate. The responsibility to comply with the above requirements lies with landlords and not their letting agents, however, letting agents can fulfil this obligation on behalf of their clients. It may therefore be prudent to formalise this arrangement in contracts between agents and their clients.
The Act also includes provisions to ensure that from April 2016, private residential landlords will be unable to refuse a tenant’s reasonable request for consent to energy efficiency improvements where a finance package, such as the Green Deal, is available. Provisions in the Act also provide for powers to ensure that from April 2018, it will be unlawful to rent out a residential or business premise that does not reach a minimum energy efficiency standard (the intention is for thus to be set at EPC rating “E”).
For more information, contact Anna Gora agora@pwhmllp.com
