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The New Green Deal – Carbon Emissions Initiative
A new scheme relating to Carbon emissions has been initiated by the government, commencing 28th January 2013, for which details are gradually being clarified. This new scheme has a significant potential impact on residential property transactions due to its deferment of the cost of improvements in energy efficiency and how these costs will impact on future owners of a property.
In simple terms, the scheme allows house-owners to take various measures to improve the energy efficiency of their home, the net cost of which is spread over a period of time – together with interest charges. The scheme is intended to balance the cost of the upgrades and installations against the reduction in the annual energy costs for the property, thereby producing a ‘zero’ increase in costs overall.
Primary concerns for those buying and selling properties will be the responsibility for the ongoing debt of the ‘Green Deal’ which is effectively set-against the household energy costs. Evidently if a property subject to such an arrangement is sold, or even tenanted/leased, issues arise in insuring that the debt is properly transferred to the new owner or tenant. Equally, enquiries will need to be made into the rights of the property owner to terminate such an arrangement should, the benefits claimed under the scheme not materialise or fall-short of the initial level proposed. A potential ‘Green Deal’ customer must obtain three quotations prior to work being undertaken, and installers should be required to obtain all the necessary planning and building regulations consents, all of which will need to be inspected on sale. The quality and detail of the work involved will need to be considered by a future purchaser – and their mortgagee – as well as the detail of the ‘Green Deal’ scheme debt itself.