Comment: Green Deal or no deal?

Published:  29 January, 2013

Today Greg Barker, climate change minister launches the Green Deal. He says "it is the "most ambitious home improvement programme since the second world war" and as many as 14m houses could benefit, writes industry correspondent Dean Stiles.

The Green Deal is undoubtedly ambitious but falls flat in the face of simple finance: the cost of the loan at 6.9% is simply too high for any but a handful of home owners to benefit.

Householders would be better off borrowing against their mortgage, easily at half the interest rate of a Green Deal Loan, to fund improvements. Worse still, the loan is attached to the property so it is likely that when it comes to selling the property most buyers will demand the price be reduced by the cost of the loan.

Green Deal throws up other hurdles: householders must pay a £100 plus for a survey: That's a hefty surcharge to install a boiler. There is the £125m government giveaway in the form of cash-backs, such as £270 for a boiler and £650 for solid wall insulation and those installers and merchants quick of the mark may benefit. But £125m is small beer against what is needed to stimulate the housing refurbishment market.

For merchants, the major downside is the way the Green Deal concentrates the supply of materials and installations in the hands of a few large providers that deny the end-buyer influence over what is installed and by whom.

As it stands, builders' merchants and others in the industry are unlikely to see much of lift in sales following the Green Deal. If the government is serious about green investment it should use the ultra-low interest rates currently available to it to provide funds to invest in green technologies.

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