Green Loans Q&A: How does Pay As You Save (PAYS) finance work?

Q). When can I apply for a loan to improve the energy efficiency of my home?

A). Pay As You Save green finance, with repayments linked to the property, will require primary legislation and we'd expect them to be in available by 2012.

Q). What is the most I can borrow?

A). Our current measures are tackling the easy-to-achieve measures, like loft insulation, so the point of making green finance available in the future is to remove the upfront costs of relatively expensive improvements. The cost to each household will be different depending on which measures they install, which will in turn depend on the type of property but the average upgrade could be about £8,000-£10,000.

Q). What measures are eligible for funding?

A). By an eco-upgrade we mean the installation of a set of measures that goes significantly beyond basic insulation to include more expensive improvements such as solid wall insulation or a form of renewable energy generation. Small-scale renewable electricity (photovoltaic solar electrical panels) and heat technologies (solar thermal panels) will also be eligible for the additional incentive provided by the Feed-in Tariff (FiT) and Renewable Heat Incentive (RHI) from April this year and April 2011 respectively.

Q). You say my combined payments for the loan and my energy bills, will be lower than my old energy bills? Can you give me an example?

A). If you spent £4,200 installing a typical solar thermal  hot water system on the roof of a 3-bed semi, you would expect to get over £500 a year from savings on your energy bill and income from the Renewable Heat Incentive. If you chose a Pay-As-You-Save (PAYS) loan over 25 years to cover the installation costs, you would repay about £330 a year. So even after making your PAYS repayment you would be about £170 a year better off.

Q). What happens when I move home?

A). On average people move house every 12 years, which may not be long enough a period for the bill reductions to cover the upfront costs. So the point of attaching PAYS finance to the property is that householders would only be responsible for the repayments while benefiting from the measures. When you move house, responsibility for repayments would pass to the new owner.

Q). Won't that mean my house is less desirable to potential buyers?

A). No - anyone buying a property with repayments attached to it would benefit themselves from the moment they move in from lower energy bills than they otherwise would have been. Sellers would be able to make a virtue of improvements through the advice contained in their Energy Performance Certificate.

Q). I rent my home. How can you make my landlord increase the energy efficiency of my home.

A). Energy suppliers have obligations now to improve the energy efficiency of all homes, and today we've said we'll extend that obligation beyond 2012. For the private rented sector, we've said for the first time today that we'll be consulting on regulation to require standard insulation measures (loft and cavity insulation) to be a condition of renting out a property.

Reference: Department of Energy and Climate Change (DECC)

URBAN ENERGY

Our mission: “To provide and install, sustainable, world class, clean energy products with the highest level of service and care”.

Urban Energy is an innovative organisation specialising in the financing, design and installation of solar powered energy systems for commercial property (private and public) and domestic dwellings. Our expertise in the field of Government sponsored funding programmes, PAYS loans, FiT's, RHI's and solar power products will provide individuals and organisations with an excellent opportunity to overcome capital cost barriers, save money on energy bills, increase profit margins, increase the value of their property and reduce their carbon footprint.

Urban Energy employ the very best engineers in this field, all of which are fully qualified, certified and Government approved to carry out this task, complying with strict guidelines and are members of the Solar Trade Association.

For further information about Urban Energy products and services:
Call: 0800 232 1624
Email: info@urbanenergy.org.uk
Website: http://www.urbanenergy.org.uk/