Millions of homeowners are offered 25-year 'green' loans

Published on Tuesday 2 March 2010 21:50

HOMEOWNERS will be able to take out "green loans" to pay for energy efficiency improvements such as insulation and double glazing under new government plans.

• The government scheme would allow home owners to take out loans for energy efficiency improvements, such as the installation of solar panels, on their properties

The scheme, announced yesterday, would mean the loans could be paid back through savings on utility bills.

According to the government, the plan would mean that households could save money on heating and electricity costs while also helping to meet climate change targets.

The Pay As You Save (PAYS) programme aims to overcome the financial barriers – such as upfront costs – people face in trying to make their homes greener and more energy efficient.

Overall, according to the government's calculations, homeowner's would be better off despite having to repay the loan because the amount paid back each year would be less than the savings on bills.

The loan would be tied to the property, rather than the individual who takes it out.

This would require new legislation to be passed, which would be aimed at enabling the loan to be paid off over a period of 25 years instead of forcing people to repay it before they moved house.

According to government calculations, a homeowner living in a three-bedroom, semi-detached property who installed solar panels on the roof would be 170 better off each year, despite having to pay back the loan.

Similar calculations suggest that the owner of a three- bedroom semi-detached house who took out a 25-year PAYS loan to pay off the installation of an air-source heat pump – a device which extracts heat from the air – could end up 1,000 a year better off.

Energy and Climate Change Secretary Ed Miliband said: "The 'Warm Homes, Greener Homes' strategy will remove the deterrent of upfront costs and reduce the hassle of moving to greener living.

"Making homes more energy efficient will help protect people from upward pressure on bills, tackle climate change and make us less reliant on imported energy."

The scheme forms part of a strategy to cut greenhouse gas emissions from housing by 29 per cent by 2020.

About a quarter of the country's emissions come from existing housing stock.

The government also claimed that the scheme could create 65,000 jobs by 2020, ranging from installation of renewables to providing home-energy advice.

Ministers are also aiming, through the new strategy, to see six million homes insulated by 2011, all lofts and cavity walls where it is practical to do so insulated by 2015, and seven million "eco-upgrades" offered to householders by 2020.

The government will also consult on setting minimum energy efficiency standards for rented properties, to help tenants left paying high energy bills in draughty, inefficient homes where landlords have no incentive to improve them.

However, Chas Booth, from the Association for the Conservation of Energy, dismissed the scheme as "too little, too late" and called on the government to show "more ambition".

He said: "Finance is one of the critical barriers to improved energy efficiency, but offering only seven million eco-upgrades across the whole of the UK is simply not sufficient to achieve the government's own climate change emission targets.

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