Nationwide and LBG warm up to Green Deal
Homeowners can apply to their energy company for an assessment of their property to find out if they are eligible for improvements which will make their homes more energy efficient – paid for by a loan through the energy bill.
A spokeswoman for Lloyds Banking Group said: “We are supportive of any initiative that helps homeowners to improve their property, both in terms of efficiency and comfort.
“We will not be changing our affordability calculations as we expect the savings achieved through these improvements to be reflected in the savings in utility bills.”
Nationwide has developed a comprehensive policy which takes into account the loan size and works to be carried out to the property.
Andrew Baddeley-Chappell, head of mortgage policy and strategy at Nationwide, said: “Nationwide recognises the benefits to all that comes from investment in improving the energy efficiency of our homes and supports the aims of the government’s Green Deal. The Green Deal has no impact on Nationwide’s affordability criteria and no material impact on the way in which mortgages are processed.”
It will allow all Green Deal plans up to the value of £10,000 to take place without the need for consent. For works in excess of £10,000 it will require the customer to provide full details of the proposals including costs and estimated savings.
Baddeley-Chappell added: “Whilst there is no financial limit on the amount of the loan that can be borrowed through the Green Deal there is a maximum term of 25 years and as the costs are repaid through the energy saving every property will, in effect, have a maximum loan cap.
“The Green Deal finance is unsecured and as such does not place an additional charge over the property. However there will be a flag on the land registry which will be picked up in searches conducted by property conveyancers, which ensures that the Green Deal is disclosed in all cases where property ownership changes.”
But brokers have raised concerns that the Green Deal Scheme will add a stigma to the property when the owner decides to sell or if they wish to remortgage.
Matthew Fleming-Duffy, director at Cherry Mortgage & Finance, said: “There could be a storm brewing here.
“Think about the problem that solar panel leases have caused when the Skipton refused to lend on a property which had this addition. The Green Deal is a much bigger scheme than that and I don’t know if it has been talked through fully with the lending community and certainly among brokers there are a lot of unanswered questions.”
A spokeswoman for the Council of Mortgage Lenders has confirmed it is “broadly happy with the guidance” which she said does go some way to addressing the practical issues and concerns surrounding “what if” scenarios.
She said: “How lenders react to the guidance depends on the lending policy they choose to adopt.
“Brokers are not wrong to flag these concerns. It is a new initiative and lenders do need the discretion to be able to interact with the green deal in the light of how it develops.”
The CML was unable to confirm the level of lender engagement stating the scheme was still in its infancy.
A spokesman for the DECC said that since its inception in February this year there had been 19,000 assessments but could not confirm how many had resulted in actual take up.
And in response to broker concerns, the spokesman added: “Home improvements make properties more attractive to buyers and the Green Deal can help people improve their homes.”
The Energy Performance Certificate will show both the estimated savings and the Green Deal charge that has to be paid which will show the typical expected savings to be equal to or more than the charge in the first year of the Green Deal plan.
He added: “Everything will be transparent and we think that many buyers will want houses which are attractive, warm and easier to heat, particularly when the costs are covered by the expected savings.”
The full DECC guidance can be read HERE