The sudden and surprise discontinuation of the Green Homes Grant, which government ministers hoped would improve the energy efficiency of over half a million homes in England by providing vouchers for necessary upgrade work, has been branded a “missed opportunity”.
The scheme, which opened for applications at the end of September last year, saw just 10 per cent of the country’s 600,000 eligible homes sign up to it.
At the end of March the government said: “The scheme was designed to provide a short-term economic boost while tackling our contribution to climate change.” It confirmed that the money earmarked for the grant — £300m — would now be used by local authorities.
This move “sends entirely the wrong message to consumers and builders, and will harm the UK’s desire to be seen as a global leader in tackling climate change”, according to the Federation of Master Builders chief executive Brian Berry.
Further criticism goes beyond the messaging of the move and into its operations.
For example, Powered Now chief executive Ben Dyer says: “We were regularly hearing from our clients a tale of two stories; they were either inundated with jobs or had zero pickup.
“Customers of the scheme have also echoed these sentiments and have stated that there were installers in the market that weren’t playing by the rules.
“By outsourcing the logistics of the scheme to US-based businesses,” Dyer adds, “the government was neglecting the resources that we have on our front doorstep.”
Property Master chief executive Angus Stewart says the scheme was designed to mitigate misuse and fraud, “but the way this was done unfortunately made it difficult for all parties to use”.
He explains: “Dividing the measures landlords could claim for into primary and secondary was confusing, and landlords had to first claim for work that fell under the primary heading. It would have been far better to have let landlords decide what was needed to bring their properties up to the required standard.
“It proved challenging to find the correctly accredited tradespeople in sufficient number to do the work and, finally, having to wait for a voucher and then wait again to redeem it once the work was completed was not particularly attractive to either landlords or tradespeople.”
Dyer continues: “The other issue was that the government did not approach this with the simplicity it did for schemes such as furlough. Frankly, simplicity should have been the watchword for the entire scheme but, with varying definitions of what people could apply for, and ambiguities of what bad players in the market were charging customers, this was often lost in translation. If schemes are not straightforward, people won’t use them.”
Simplicity is certainly the watchword for Stewart when asked what form the scheme could take in a successful comeback. He says it should allow the landlord to carry out work “and, once they can prove they have achieved the desired EPC rating, funds are released.
“There may also be a role here for mortgage lenders to design products with an extra element that could be repaid once the property meets the required EPC standard,” he says.
“Without any type of scheme, the government has left itself open to not meeting its net zero target.”
Paragon Bank managing director of mortgages Richard Rowntree says that improving the data available on energy performance certificates would help.
“A large percentage of properties don’t have a rating as they may be unencumbered or have not been sold in a long time,” he says. “A central database would be a great start, plus consumer campaigns about how people could improve their rating.”
Further evolution of the scheme, Stewart believes, may see the government “set mandatory targets for lenders to have a property lending portfolio average of EPC band C. Although this may seem some way off, lenders are already stepping up to the plate”.
He points towards Nationwide’s recent £1bn commitment towards green home improvements at preferential rates and Paragon’s 80 per cent LTV buy-to-let range for homes with an energy rating of C.
“I think we will see a lot more activity in this area as this issue continues to gather pace,” says Stewart.
“The government has made it clear that private rented property is first in line with its proposals for all tenancies to have a minimum EPC of C by 2028, and landlords will need financial support to achieve that,” says Paragon’s Rowntree. “I expect lenders will launch increasingly innovative products that will either help to increase the number of properties rated C or above or help upgrade existing homes in the sector.
“Pricing is certainly one strategy lenders are using, but it won’t be the only focus. For example, lenders may consider mortgage holiday-type scenarios to enable landlords to upgrade when they don’t have a sitting tenant,” he concludes.
