Two recent developments relating to “green” energy have potential implications for both home owners and purchasers of properties.

Soon to be introduced, as part of the 2011 Energy Bill is the “Green Deal”.  This is intended to assist home owners who want to install energy efficiency measures in their property but are deterred by the upfront costs involved.  Under the Green Deal private companies, charities and local authorities are able to cover the upfront costs.  The owner then repays those costs through savings made on their energy bills with the intention that the repayment that they have to make should never be more than the amount that they have saved by the energy efficiency measures being installed.  As a result, therefore, customers should not see any increase in their bills, even taking account of the Green Deal repayments.

The extra charges under the Green Deal remain with the billing at the property, rather than the individual.  Accordingly, when a property that is subject to the Green Deal is sold the new owner takes over responsibility for repaying the Green Deal costs.  Accordingly, the seller of a property that is subject to the Green Deal should disclose this to the potential buyer and should ensure that they obtain confirmation from their buyer that they will be responsible for the charges, payable through their electricity bill.  Furthermore, it will be necessary for buyer’s solicitors to make an enquiry about the Green Deal so that they can advise buyers of the potential implications.

Another recent development has been the increase in the amount of properties where solar panels are fitted to the roof.  Many home owners have entered into arrangements where they rent their roof to solar panel companies and receive free electricity in return.  The solar panel companies recoup their costs by receiving the additional income which is received by selling the surplus electricity back to the National Grid under the Grid Tariff scheme.  Such deals mean that home owners can have the solar panels fitted without having to incur any upfront costs.  However, a couple in Southampton have recently discovered that such a deal has affected their ability to remortgage their property.  Although their original mortgage lender agreed to the arrangement, when the home owners have come to remortgage the property they have found other lenders unwilling to accept the situation and have found it difficult to remortgage.  It seems that many mortgage lenders are refusing to lend where the panel provider is supplying and fitting the panels free of charge and is taking income from the grid tariff scheme and is creating a long term lease against the roof and roof airspace.  Lenders are unhappy about the potential implications for them in the event that they repossess the property, particularly as the leases are usually of a commercial character.  Many lenders insist on there being a break clause in the arrangement so that if the property is repossessed the arrangement can be cancelled.  However, many panel providers are only agreeing to cancel the agreement in the event that a lender has found it difficult to sell the property with the agreement in place.  As lenders do not wish to have potential sales of repossessed properties hindered, they are, as a result, refusing to lend on properties that are subject to this type of arrangement.

Clearly, green energy is a developing area with perhaps unforeseen implications for both home owners and conveyancers.