With just weeks remaining until the launch of the Green Deal, construction companies involved in the scheme have raised fears that local authorities may not be ready to deal with the volume of planning applications for work under Green Deal agreements, writes Chloe Stothart.
Work that changes the appearance of homes, such as fitting solid wall insulation to the outside of the property, could require planning permission.
But some industry figures fear that planning departments might reject such applications and ask consumers to install internal solid wall insulation, which could be more expensive, technically difficult and disruptive for occupiers.
The issue is most likely to affect blocks of flats in the social housing sector where the £1.3bn per annum ECO (Energy Company Obligation) funding stream is likely to fund external insulation projects, but it could also affect individual owner occupiers in older homes.
There are 7m properties in the UK with solid rather than cavity walls, which were mainly built during or before the Victorian period. Adding external insulation can be more effective and less disruptive to occupiers than insulating them internally.
Paul Joyner, director of sustainability at builders merchant Travis Perkins, said: “ECO funding will depend on there being big volumes of this; the model won’t work if every time it is proposed the local authority says we do not want that.”
Andrew Eagles, managing director at consultancy Sustainable Homes, said: “There is a concern that planning departments, particularly in London, are not geared up for solid wall improvements.”
Meanwhile, opinion is split over whether consumers would be deterred by possible interest rates of 7.5% on Green Deals loans.
Eagles said: “This is quite high. It is likely to be quite off-putting for a number of groups of consumers.”
But Joyner believes consumers will not be put off because the loan is repaid through savings on energy bills so the interest rate will be only a part of the payment. He said: “Nobody knows exactly what the interest rate will be. We think it will be between 6% and 8%. Because there is no upfront payment and it comes out of the energy bills, the interest rate won’t appear as fundamental to the customer as something that was upfront. The challenge is to get the message across that it does not matter what the interest rate is. As long as the golden rule applies [that energy savings will exceed the cost of the Green Deal modifications] you will not be any worse off.”
Speaking at a hearing of parliament’s Climate Change Committee on 17 July, energy and climate change secretary Ed Davey said the interest rate would be up to the market but his department expected a rate of 7% to 7.5%. “If the interest rate were to come out at 7% to 7.5% that would be extremely competitive for unsecured lending,” said Davey.
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