Posted by: Nick Duxbury30/08/2012
Tenants wanting to use the government’s green deal to cut fuel bills may find their landlord has other ideas
‘A government accredited green deal provider offering you and your family the opportunity to slash your fuel bills and improve the warmth of your home at no upfront cost.’
‘Great – where do I sign?’
The punchline for all those tenants who do receive such knocks on their doors after 1 October is that they don’t. Most landlords will not grant their tenants consent to have these energy efficiency works carried out on their properties. Despite the government’s flagship energy efficiency programme, the green deal, launching (softly) in just one month’s time, the majority of the UK’s largest landlords do not intend to let their tenants make their own arrangements for carrying out green deal works on their homes.
We know this because this week we carried out a snap shot survey to get a taste for what the big boys were thinking. Only two out of 17 of the largest landlords would be happy for tenants to agree deals with providers which are not part of their own planned green deal programmes. This sounds reasonable, except for the fact that only two of the 17 actually have planned green deal programmes. A total of nine landlords ruled out allowing tenants to commission the work while five said they had not decided.
Our survey also confirms what I wrote last week: that most landlords have not yet formed anything resembling a policy on green deal. There is widespread ignorance and scepticism about what the green deal means for social landlords. Most see it as a potential liability: a financial liability for their tenants who already face financial burdens of rising rents, benefit cuts, the bedroom tax not to mention general pressure from the tanking economy; and a financial liability for landlords too. If tenants fail to make the energy savings predicted, then it is their rental income that could suffer. Who gets paid first? If works cause structural damage to the properties, or reveal the need for unplanned further work what then? Who is responsible for ensuring the measures are looked after? Most significantly is the unanswered question that most lawyers I speak to shy away from discussing in any depth: how will lenders view the green deal? Will they view the green deal charge attached to the properties (or at least the meters) as a contractual liability that could reduce the value of their security in the unlikely event of a loan default? In short, will the green deal contracts with third party providers make properties harder to sell. The indications are that banks may take the view that this is the case. I have written about this before, but landlords are becoming increasingly scared that lenders will use the green deal as an excuse to ratchet up interest rates and tighten loan covenants.
There are a catalogue of complex questions and very few clear answers.
As such, our survey shows only two of the largest landlords, Gentoo and L&Q have decided to become green deal providers. Another five are looking to form partnerships with green deal providers. As and when they do this, it seems only sensible that tenants are told to work with a provider landlords trust to tinker with their assets. However it does raise the interesting prospect of a rival green deal provider making a cheaper offer to a tenant, who afterall is liable for achieving the savings, and tenants being forced to accept works from a more expensive preferred partner provider of their landlord.
There are plenty of landlords such as Affinity Sutton that are still working out whether or not they will become green deal providers, but until they do, they do not want their tenants undertaking piecemeal green deal agreements with rivals – especially when they could probably carry out the works more cheaply themselves.
This means the majority of social tenants will be forced to wait some time before they can have green deal works carried out on their properties.
Now, clearly this snap shot is far from the full picture; there are other smaller landlords such as Alliance Homes looking to become green deal providers. And yes, this is only a ‘soft launch’, and yes, it is unlikely green deal providers will come knocking in any major way for a while. But nonetheless, these are the biggest and most commercially savvy landlords around. If they are not embracing the green deal then there should be alarm bells ringing at DECC HQ. This can’t be the response the government was hoping for from the social housing sector.
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