Green home loans

Published:  04 March, 2010

LONDON: Energy and climate change secretary, Ed Miliband, yesterday announced details of a "green loans" scheme to help people pay for improvements to their homes to make them more energy efficient.

Finance for loft insulation is expected to come from retailers like B&Q and banks like the Co-Op.

Under legislation proposed today, homeowners would be able to take out loans for thousands of pounds to install loft or wall insulation or solar panels. These loans would be fixed against the home, so that if the borrower moved out, they would not have to continue to pay.

The new owner would inherit the annual charge to pay for the green measures, but would also continue to benefit from the resulting lower energy bills. The government said that the finance - expected to come from retailers such as B&Q and banks including the Co-Op - would initially be available on a small scale from 2012, although this would improve.

Around 500 homes in Birmingham, Sunderland, Stroud and the London borough of Sutton have been testing a £4m pilot for the Pay As You Save programme.

In the pilot, homeowners made repayments for green technologies over a long enough period so payments are lower than the predicted savings on energy bills, though the financial packages also included options in which they paid some of the upfront costs.

The whole house energy makeovers, which the government wants to roll out to improve the energy efficiency of the UK's 22m homes, will provide a range of technologies including insulation and small-scale renewables such as solar panels or ground source heat pumps to provide energy.

Mr Miliband said: "Helping people save energy at home can make it easier and cheaper to keep homes warm and appliances running. It is also the best way to cut our carbon emissions.

"This new approach will allow people to pay for home improvements after they have had them installed rather than before.

The Department of Energy and Climate Change is in discussions with a number of sectors including retail and banking over how the loans can be delivered, while legislation will need to be introduced to allow the loans to be attached to homes.

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