The Green Deal for Landlords may not seem the bonus the government intends for upgrading buy to let homes.
Some of the largest providers are ruling out Green Deal loans for landlords because they fear tenants will not agree to pay for energy efficiency improvements to their homes.
British Gas is among the companies spurning applications from landlords that need loans under the Green Deal.
The company’s Green Deal helpline says loans will not be offered to landlords because of ‘possible legal problems’.
The helpline says that landlords must have written agreement from their tenants to carry out a Green Deal assessment, but landlords must pay the cost of any improvements.
Under the Green Deal, landlords should get funding to pay for replacement windows and doors, cavity wall insulation, draught-proofing and new boilers and heating systems.
“We won ‘t be offering loans to landlords unless we can see that when new tenants move in they will take on the Green Deal charge with their utility bill,” said the helpline. “Our legal people are not sure what happens if a landlord has a loan that the new tenant does not agree to continue to pay.”
Another issue is if landlords with a credit history can join the scheme.
Landlords will face a credit check before a Green Deal loan is granted.
The Energy Saving Trust, the government-funded agency spearheading the Green Deal, explained providers make the decision about whether a landlord is given a loan to improve property.
However, the loan stays with the property, not the tenant or landlord, so if a new tenant moves in or the landlord sells the home before the Green Deal loan is paid off, the new renter or owner must take on the debt.
This leaves landlords with the option of paying up to £150 for an assessment and then finding they may have to pay for the improvements upfront if the provider does not offer credit
Under the deal, landlords must bring their properties up to a minimum energy efficient standard by 2018 or face a ban on letting the property.