What is Green Deal Finance?

Full Definition

Green Deal finance was a UK government scheme, running from 2013 until new applications closed in 2015, that allowed householders to fund energy-efficiency improvements -- such as loft and cavity wall insulation, double glazing or a new boiler -- without paying the full cost upfront. Instead, a Green Deal provider funded the work, and the cost was recovered gradually through a charge added to the electricity bill for the property, structured so that the estimated savings from lower energy use were intended to be greater than, or roughly equal to, the repayment charge (the "golden rule"). A key feature was that the repayment obligation attached to the property's electricity meter rather than to the individual who took out the finance, so if the property was sold or the tenancy changed, the new occupier would generally take on the remaining Green Deal charge along with the benefit of the improvements already installed. The scheme was closed to new applications after government funding for its associated cashback incentive ended and take-up fell short of targets, but existing Green Deal charges can still appear on some properties' electricity bills today, which is something buyers, conveyancers and mortgage lenders need to check for during a property purchase, since an outstanding Green Deal charge is a financial liability attached to the property. Homeowners now looking to fund similar improvements are more likely to use schemes such as the Boiler Upgrade Scheme, ECO4, or a standard personal loan or further advance on their mortgage.

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