How will adopting the Green Deal affect the value of my home?

6th November 2013
Image:Thinkstock:iStockphoto

Many people are considering the government's Green Deal as a means of making a long term saving on high energy bills.

The Green Deal allows you to make energy saving improvements to your home, which are then paid for through your energy bills. The idea is that this is cost neutral, so any money you pay back in your bills you would have been paying anyway had you not made your home more efficient. This makes taking advantage of the Green Deal a great energy saving tip, especially up till March 2014 as there are cashback incentives till then).

Thus the loan is attached to your home, not to you. This means that if you move the next owner will have to be the one to cover the costs of the work.

This has worried many people – as they think it could have a negative effect on the value of their home as it represents a liability for any future buyer.

As the scheme is in its early stages, it is unlikely that many people will have sold their homes after taking out the Green Deal. This makes it difficult to judge just what the impact will be.

However research from the government shows a home with an energy efficiency rating "B" is worth £16,000 more than one with a "D" rating.

This suggests that rather than devaluing your home the Green Deal could actually increase it substantially. This is because double glazing, new boilers and long-term cheaper energy bills are actually highly desirable features.

There is the potential that some buyers may be a little put off by the Green Deal being attached to a property, so they will ask the value of the loan to be subtracted from the asking price of the house. There are a couple of major disincentives to this though, the first is the early repayment charges and the second is that the new buyers will be getting cheaper energy bills at the expense of the original owner.

Such issues will need to be resolved – details of the Green Deal repayments are included in the Energy Performance Certificate which comes with every home. This means that there is no way for a seller to conceal Green Deal payments from a prospective buyer.

Posted by The EnerGenie

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