New Government House Improvement Loan Could Be on the Way

Alex Parsons Alex Parsons | Secured Loan Expert

Have you ever had the experience of obtaining a government-subsidised house improvement loan for the purposes of improving your property? If not, you may have that opportunity at some point in the future. That is if some Conservatives are successful in convincing the government to introduce a new loan programme that would promote residential renewable energy installations even as government subsidies for the industry come to an end.

For years, the government has been incentivising renewable energy adoption by subsidising the industry while simultaneously providing cash incentives and lower feed-in tariffs to property owners. But it has been made abundantly clear that these programmes are not going to last much longer. The government will be phasing out its direct subsidies of renewable energy and, along with it, there is likely to be a decline in incentives to consumers.

What will that mean for renewable energy at the residential level? It will probably mean slower adoption if not a complete bottoming out of renewables. The simple fact of the matter is that the home improvements required to make use of renewable energy sources are expensive, and people just don't have that sort of money lying around. Thus, Conservative think tank Bright Blue is calling on the government to come up with a new house improvement loan programme for property owners willing to install renewable energy technologies.

How It Would Work

The government hasn't even started to consider the proposal, let alone begin working out its details. Still, Bright Blue has already offered a model plan. Under their proposal, 'Help to Improve' loans would be attractive to property owners for two reasons:

  • they would offer lower interest rates than the 7-10% afforded by the failed Green Deal scheme; and
  • revenue from the current RHI and FiT subsidies would be applied to reduce monthly loan payments.

Bright Blue is convinced that one of the reasons the Green Deal failed is because the loans offered by the government were not financially attractive. Their proposed Help to Improve loans would address the failings of Green Deal by offering an attractive house improvement loan the average property owner could afford.

Bright Blue is also proposing new ISAs to be offered at the same time as the loans. Encouraging property owners to save via such accounts would be accomplished through government top-ups that would further reduce the cost of repaying the loans made under the scheme.

Still a Work in Progress

The Bright Blue proposal is certainly ambitious if nothing else. Still, convincing the government to follow the failed Green Deal scheme with another incentive programme that may not ultimately succeed is still a work in progress. There's no telling how government officials will react at a time when they are trying to get runaway spending back under control.

Where does that leave property owners? Well, those with the financial means can still get secured loans to address home improvements by using existing equity. With the ability to borrow tens of thousands of pounds via secured lending, property owners genuinely interested in adopting renewable energy technologies can borrow against their homes to make the necessary renovations. Once complete, those property owners will enjoy a more attractive energy tariff at a minimum.

It could be that the government will eventually offer another subsidised house improvement loan to encourage renewable energy adoption among residential property owners. But until that time comes, the best resource available to them is the standard secure loan. Thankfully, there is no shortage of banks, building societies and specialised lenders making secured loans available all across the UK.

Sources:

  1. Solar Power Portal ?? http://www.solarpowerportal.co.uk/news/conservative_think_tank_calls_for_reforming_of_domestic_renewable_energy_po

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