Green Deal finance loans are to reopen by the end of March after the company set up by the government to manage its former flagship energy efficiency scheme was bought by City investors over the weekend.
Greenstone Finance and Aurium Capital Markets have snapped by the Green Deal Finance Company (GDFC) for more than £40 million after the scheme was scrapped by former energy secretary Amber Rudd 18 months ago.
The new owners will take over the Green Deal’s existing loan book, which according to the most recent figures available covering the scheme up to November 2016 includes over 14,000 Green Deal plans.
As well as continuing to serve these existing loans Greenstone Finance, which invests in organisations focused on financing in renewable energy and energy efficiency, and Aurium have announced that they will commence financing of new Green Deal loans in the current quarter.
Kilian Pender, founder and chief executive of Greenstone Finance, said: “We believe that the concept of repaying your loan as you save on your energy bills is an excellent one and with the significant private investment that we have secured, we’re looking forward to rolling the Green Deal finance scheme out across the country.
“We will provide homeowners a cost-effective way to improve their homes and quality of life.”
Neither Greenstone or renewable investor Aurium have clarified how they hope to correct the issues with the Green Deal when it is launched under a new name.
The scheme struggled under government management with homeowners often finding it too complex or put off by the high interest rates on the loan, often between 7-10%.
Many were also unaware of the scheme altogether after only £6 million was spent on publicising the Green Deal between its launch in 2013 and April 2015, with nothing more spent before its closure in July that year.
These failures led to the scheme being closed down by Rudd in July 2015, leaving the infrastructure of the GDFC free for privatisation.
Under its ownership, Greenstone and Aurium have said the loans have the potential to provide finance to those seeking to meet the capital costs of energy efficiency measures and help those wanting to increase the value of their homes through installing renewable energy or energy efficiency measures.
They will also use the GDFC, when launched under a new name, to address the demand expected by April 2018’s regulations of the private rented sector, whereby landlords who own properties that fall below the new minimum energy efficiency (EPC) rating of E will be required to make improvements.
These rules will hit property owners in the domestic private rented sector particularly, with Green Deal finance originally intended to meet the costs imposed by these new rules. However, around a fifth of commercial properties are also likely to fall foul of the new rules and Nimesh Kamath, partner at Aurium, has suggested these businesses could also benefit from the takeover.
“This joint venture with Greenstone Finance adds to Aurium’s continued commitment to the UK renewable energy sector and, in particular, the objective of improving the energy efficiency of UK buildings for consumers and business owners alike, whilst supporting the wider goals of distributed energy generation and energy security in the UK,” he said.