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A new government initiative hopes to spur private investment by issuing soft loans to finance retrofitting houses.
The loans allow for flexible repayment over a long period of time, which should make investments affordable and financially rewarding. A recent study showed that Britons tend to change houses on average every 12 years, which still would not be long enough to pay off the entire loan.
However, the key innovation that will await the approval of the next parliament will be legislation that will guarantee the soft loans are attached to the real estate, not the owner.
Doing so will allowing new homeowners to finish paying the loan after previous tenants move, and continue reaping energy saving benefits.
Interest rates should be low and payments would be small enough that while loans could last up to 25 years it would still be profitable and continue to spur investment.
The programme dubbed 'Pay As You Save' (PAYS) has been tested by approximately 500 homes that lie in Birmingham, Sunderland, Stroud and the London borough of Sutton. On average, the government expects households to save £380 annually by investing in thick-wall insulation, draft-free windows, or solar panels.
Those that endorse the programme are not satisfied however-the government has yet to announce the volume of funds that will be available to finance retrofit projects.
Critics believe that a green bank designated to guarantee full-out retrofits for houses, rather than small step-by-step improvements.
Still, the programme offers potential. The PAYS soft loan programme could make sharper energy management affordable for people who couldn't pay to re-fit their homes at market price.
The proposal is in line with the government's goal to reduce carbon emissions from households by 29% by the year 2020. The government hopes to drive the private sector's investment in housing upgrades to £2.9 billion by the end of the year, and is part of a wider initiative called 'Warm homes, greener homes'.
Author: Michael Good | Climate Action
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Bryn Pynzgauer
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