The hole in the plan
With just over a month to go until the official launch of the green deal, Nick Duxbury finds out if social landlords are prepared for the energy efficiency programme or whether they are heading for a fall.
What is the green deal and how will it affect my organisation? These are two questions housing organisations across the land should have worked out the answers to by now.
From 1 October accredited companies called green deal providers, such as DIY retailer B&Q, will be able to knock on tenants’ doors to offer them green deals - loans to carry out energy-efficiency measures such as loft and solid wall insulation. These loans, which are fixed to the property, are then repaid over time through monthly charges attached to energy bills. It works for tenants because the charges must always be less than savings on average energy bills resulting from the improvement work.
The government hopes 14 million households will be attracted to the promise of reduced energy bills and warmer homes at no upfront cost. In the case of social tenants, green deal providers will need the landlord’s consent to go ahead with the works - but landlords are only able to say no if they have good reason.
There are plenty of reasons why a landlord might not want works carried out on their properties - they could be concerned about the risk of structural damage, they could want the work to be carried out more cheaply, or they might want to co-ordinate the measures with other planned works across their stock.
Either way, if tenants start requesting green deals, landlords need to have a policy in place on how they will respond. And fast.
Ignorance is bliss
The only problem is, very few landlords are anywhere near taking a stance. The Homes and Communities Agency has recently published guidance for English landlords, but despite this, with just over a month to go until the green deal is formally launched, the housing sector remains largely ignorant of a scheme which the government is relying on it to help deliver. Many could be heading for a fall because they don’t know what the green deal is or how it works - let alone whether they want to become green deal providers.
‘Some forward-thinking landlords have done a little bit of work preparing for the green deal, but the majority have done hardly anything,’ says Andrew Eagles, managing director of consultancy Sustainable Homes.
‘They haven’t worked out how they are going to assess [green deal] providers if they are going to accept them, or how they are going to communicate with residents about the green deal. And in a large number of cases they are not even sure what the green deal is or how it works. It is of concern.’
New Charter is among this group of landlords which has yet to decide whether it will partake in the green deal or what its approach will be to tenants offered works.
‘It will depend on what’s being offered,’ says Ian Munro, chief executive of the 18,000-home organisation. ‘But [the green deal] is something that I am ashamedly ignorant of. It needs a good blaze of publicity before people understand what’s being offered.’
Alison Inman, chair of arm’s-length management organisation Colchester Borough Homes, agrees: ‘It is a piece of work we are doing. The sector needs to be confident about how to advise.’
They are far from alone. Even sector leaders on the green deal are yet to establish a firm policy on how they will react to tenant requests.
London-based Affinity Sutton has done more than most piloting the green deal but the 57,000-home landlord is still working out its position.
‘If we become a green deal provider then we would rather we carried out the works as we can do it cheaper than anyone else knocking on doors,’ says Jeremy Kape, director of property investment at Affinity Sutton. ‘But it is hard to answer the question [of what will we tell tenants] until we have decided whether or not we are going to be a green deal provider.’
Sanctuary Group doesn’t plan to become a green deal provider due to concerns it will be left to pick up the tab if tenants don’t achieve the required savings. However, the 78,000-home association does intend to become green deal accredited so it can fact-check green deal assessments and protect tenants from ‘unscrupulous’ providers.
‘If tenants really want the works and are willing to pay for it through the green deal then it feels unfair not to let them,’ says Sophie Atkinson, group sustainability manager at Sanctuary. ‘But there are other points to consider. For instance very few landlords, if any, have spoken to their lenders about how they see these green deal charges [loans on the properties]. Is it seen as a charge on the meter or is it perceived as akin to a legal charge which could affect your interest payments?’
According to Chris Paul, partner at Trowers & Hamlins, although there is guidance to encourage local authorities to roll out the green deal, and legislation to motivate private landlords, there is no legal obligation on housing associations to be reasonable in withholding consent. However, he adds ‘there is huge political fallout for saying “no” to reasonable works. Landlords don’t want to be on the back foot’.
The green deal also poses a difficult ethical question, Ms Atkinson adds: should tenants pay for improvements to landlords’ homes at all - even if it is through energy savings?
First Wessex, a 20,500-home association, is in the process of answering this question. The Hampshire-based landlord plans to consult tenants on what they would like, and whether they would be willing to contribute a small sum to the cost of works so the landlord can carry them out itself, without tenants taking on a loan.
This process will take a while, so in the interim First Wessex is ensuring its call centre is prepared to receive enquiries from tenants on the green deal. It also entering a partnership with B&Q so tenants can be referred to a trusted green deal provider.
‘At the moment I would say to residents “don’t get a loan out” to do these works, because we may well do them ourselves in a couple of years,’ says Paul Ciniglio, sustainability strategist at First Wessex. ‘We are worried about residents being hit with welfare cuts and rising rents - with a green deal charge to think about as well, we may well be the last to get paid.’
Others are more advanced in their preparations for the green deal. London & Quadrant intends to become a green deal provider with the aim of financing and carrying out green deal works across its own housing stock. As a result, the 66,000-home association does not plan to allow tenants to accept offers of works from rival green deal providers.
Robin Feeley, head of sustainable development at L&Q, says: ‘We think we should be able to offer our tenants better and cheaper green deal packages than other providers, so we would encourage them to wait until this time next year when we will be on our way to being a green deal provider.’
For those housing providers which don’t yet understand how the green deal will affect them, the next five weeks could be very busy. If they say no to tenants’ requests for work they need a good reason.
And if they say yes, then they need to work out who will take operational responsibility for any damage caused to their properties or defective work.
‘There is no “do nothing” situation for landlords,’ warns Mr Kape. ‘There is a huge range of potential issues and if you haven’t thought about this then you could be caught out.’
Green deal: the government’s flagship retrofit scheme which aims to insulate up to 14 million homes, lower energy bills and reduce carbon emissions.
Green deal provider: the organisations which will finance and arrange energy-efficiency works on homes, the cost of which will be recouped through a charge on household energy bills.
Green deal-accredited: companies approved to carry out assessments and green deal works.
The golden rule: charges added to household energy bills to pay for energy-efficiency works must not exceed the savings made.