New home owners forced to 'pay for previous occupant's green loan'

Home owners would be forced to pay for solar panels fitted by previous occupants, under new government green plans to be unveiled this week.

By Andrew Hough, and Louise GrayPublished: 7:30AM GMT 01 Mar 2010

Under the plans, expected to be announced on Tuesday, loans for installing renewable energy would be fixed to a specific home rather than the owner.
As part of the “pay as you save green loans” scheme, home owners would then be able to install solar panels and cavity wall insulation, Ed Miliband, the Energy and Climate Change Secretary, is expected to say


On Sunday night, the housing industry said it could lead to some people not being able to sell their home as potential buyers may baulk at the prospect of paying for a loan they did not agree to.
The pay as you save scheme, where households pay back the cost of insulation or other energy efficiency measures over time through savings on their fuel bill, is already been trialed as part of a £4 million pilot.
Banks and some supermarkets are currently in talks to help fund the scheme.
The Government is expected to roll out the scheme across the country and also introduce legislation so that loans can be attached to the home rather than the owner.
This allows people to invest in more expensive renewable energy projects like solar panels without having to worry about moving house.
Forcing a new homeowner to inherit the annual charge would “dismantle the financial barriers and upfront costs faced by people in making their homes more energy efficient”, ministers believe.
The government believes many British householders want to reduce their carbon emissions but are concerned about the upfront cost of installing insulation, solar panels or ground source heat pumps.
It is estimated that installing solar panels on a roof costs about £10,000 and about a decade to pay off.
The government is grappling with how to allow people to save on their bills, with figures showing the average homeowner moves every nine to 12 years, meaning people are not able to see their investment pay off.
“Helping people save energy at home can make it easier and cheaper to keep homes warm and appliances running,” Mr Miliband will say.
“It is also the best way to cut our carbon emissions. This new approach will allow people to pay for home improvements after they have had them installed rather than before.
“More people will be able to get the work they want done. That means less energy used which is good for the environment and lower bills which is good for families, particularly when we have cold weather like we did this winter.”
Gary Smith, President of the National Association of Estate Agents, said it would make buying and selling houses even more difficult as the country comes out of recession.
"I think it could have a detrimental effect on the housing market. Just the principle of attaching a loan to the property complicates things unnecessarily and it interferes with the free market value of the house," he said.
Greg Clark, the Conservatives energy spokesman, said the proposals were first raised by the Opposition months ago.
The Tories scheme would not guarantee loans against the house but link it to payments on the energy bill, meaning it would not affect the housing market in the same way.
"It would not be a debt attached to the home, we would pay it off over time through the electricity bill,” he said.
“It makes sense to attach the cost of it to the fuel bill and pay it back over time.”
The government has already announced a green energy cashback scheme that the feed-in tariff pays home owners for any electricity generated that is fed into the grid.