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Green Deal benefits are hard to fathom

We all want to feel we’re doing our bit to save the planet so when the government announced its Green Dealscheme stakeholders in the mortgage process queued up to lend support.

In a nutshell, a proposed financial mechanism eliminates the need for occupiers to pay upfront for energy efficiency measures on a property. Instead it provides reassurances that savings on the electricity bill should cover the cost of the measures.

But I wonder if things are going a bit brown around the edges.The main problem is that while the occupier benefits from cheaper fuel costs,savings are allocated to pay the cost of installation. So they get no direct benefit.

From a valuer’s perspective, how does one calculate the value of any features? The answer is you can’t, unlesshome buyers will demonstrablypay a premium for them. Lenders are encouraged to offer products which reward this green behaviour but nobody has been able to explain why or how.

The government needs to focus on articulating the benefits to all stakeholders if this is notto be a damp squib.

Getting partners interested in the topic reminds me of an attempt I made to get a group of lenders together to talk about green mortgages in the 1990s.It had zero attendees. The most telling piece of feedback was “we’re not interested,as we don’t lend on bowling greens”.

I’m not sure we’ve moved on much further since then.

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