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The Green Deal and its implications for Sellers and Purchasers & Landlords and Tenants

The Green Deal is established by The Energy Act 2011 and applies to Great Britain but not to Northern Ireland.  The aim of the Green Deal is to improve the energy efficiency of residential and non-residential properties and enables householders to obtain energy efficiency improvements to their property (whether owned or tenanted) without having to make a substantial capital “up front” payment.

The improvements can be paid for by instalments through the householder’s electricity bill and that for a period of up to 25 years.

The Green Deal attaches to the property and not to the person.  Payments are agreed at the start of the Green Deal and the loan remains with the property after the bill payer has sold or relinquished his or her tenant’s interest in the property.

When a property with the Green Deal changes hands information must be disclosed about the Green Deal to the person acquiring or tenanting the property.  It is a requirement that the person purchasing or taking a tenancy of the property and paying the electricity bill must acknowledge that he or she has to meet the requirements of the Green Deal.  The Green Deal (Acknowledgement) (Scotland) Regulations 2012 (“the Acknowledgement Regulations”) lay down the forms of acknowledgement. These Regulations came into force on 28th January 2013.

The Acknowledgement Regulations provide that the acknowledgement has to be given and signed by the purchaser personally and not by its solicitors or other agents. Section 14 of the 2011 Act provides that the seller must ensure that the acknowledgement is contained in the missives.  It would be advisable for a statutory style of acknowledgement to be signed in duplicate with one copy incorporated into the missives and the other copy being retained by the seller.

On leasing a property subject to a Green Deal the landlord or his letting agent must make sure that the tenant confirms acceptance of the Green Deal terms.  Again it would be better to have principal and duplicate copies signed by the tenant.

Tenants wishing to use the Green Deal require to obtain the Landlord’s written permission which after 2016 cannot be unreasonably withheld. Both parties require to agree the improvements and financial aspects such as the amount and length of the repayments.  If a tenanted property subject to a Green Deal is vacant the owner will require to make the repayments until a new tenant assumes responsibility for paying the electricity bill.

It should be noted that from 2015 in Scotland and 2018 in England and Wales it will not be possible to let residential or commercial properties with an energy rating of F or G as the minimum energy efficiency standard in terms of the Energy Performance Certificate requires to be E or better.

Sheena Johnston, 22 March

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