The Federation of Master Builders (FMB) says changes to the Green Deal loan system the company providing funds for the programme made last week are little more than tinkering at the edges and are unlikely to boost take-up.
The Green Deal Finance Company (GDFC) said on Friday that it would stop including early repayment charges in Green Deal plans immediately, and called on providers to “look favourably” on waiving any such charges that may have been included in plans that have already been purchased.
The GDFC says it has listened to feedback and believes removing the charges will simplify the system.
Early repayment charges are allowed under the Consumer Credit Act as a means for financial organisations to recoup their costs from a borrower repaying a loan early.
GDFC chief executive Mark Bayley said:
“This action is in direct response to views raised with us, and will make Green Deal plans an even more attractive, accessible and predictable proposition for energy saving home improvement”.
However an FMB spokesperson said expanding the £4,000 Stamp Duty rebate recently offered on Green Deal projects or spending more money on publicising the Green Deal would be more worthwhile investments.
“A reduction in VAT on all housing renovation and repair would also help increase Green Deal activity as it is an incentive that applies to all and not just those who are moving house.”
Until last week’s change, repayment charges had applied to loans lasting longer than 15 years, with a rate set at £6 for each year left of the plan, for every £1,000 paid early. In other words, someone who took out £20,000 over 20 years but paid off the outstanding £10,000 after ten years would have to pay an additional £600 in repayment charges.