The Government have launched a new scheme which opened on 30 September 2020 that allows you to get £5000 in government vouchers for insulation, double glazing and a range of other improvements.
In this article we explain what it is, how you can get hold of this money, and the sharia-compliance issues to watch out for.
What is the Green Homes Grant
The £2 billion Green Homes Grant is open to pretty much any homeowner in England and in most cases the government will contribute 2/3 of the cost of an eligible home improvement up to £5000.
The scheme is only live for 6 months so if you want to take advantage you need to have work completed by 31 March 2021.
Types of home improvements include double glazing, insulation, and low-carbon heating systems.
However you can’t just pick whatever you want. First, you need to carry out “Primary improvements”. These are:
- This can be solid wall, cavity wall, underfloor, loft, or roof insulation.
- Low-carbon heating. This includes biomass boilers, solar thermals systems, hybrid heat pumps, and air-source and ground-source heat pumps.
Once you’ve gone for one of these and had a contribution from the government up to 2/3 on the cost of this, you can then apply for and get a Secondary improvement. You will be paid a maximum of the same amount you got for the first improvement.
So for example if you got £2000 from the government for low-carbon heating, now you can get a maximum of £2000 for any secondary improvement.
You might get a £10,000 voucher and not have to pay anything
If you are the owner and occupier of your house and receive the following benefits, you won’t have to pay anything towards the cost of your energy-efficiency home improvements.
- Attendance allowance
- Carer’s allowance
- Child tax credit
- Disability living allowance
- Housing benefit
- Income-based/contribution-based employment and support allowance
- Income-based/contribution-based jobseeker’s allowance
- Income support
- Industrial injuries disablement benefit
- Pension ‘guarantee’ credit
- Personal independence payment
- Severe disablement allowance
- Universal credit
- Working tax credit
Is it worth it?
The key question to ask is how much the home improvement will save you on your energy bills.
The Energy Saving Trust reckon it can save you somewhere between £4-690 a year depending on the improvement you go for.
From the list of things that are eligible I would highly recommend insulation of some kind as it is typically quite cheap (so your 1/3 doesn’t cost very much either).
Then, for the higher cost items, I would weigh up how long you plan to be in your home. If you are planning to be there for the long-term, then it is certainly worth going for some of the £5000 options as they can significantly add value to your home over time.
If you use a credit card to smooth over the 1/3 you have to pay, then in effect you could be using the savings you make on your energy bill to pay for the credit card payments. For more on using credit cards from an Islamic perspective see this article.
The Energy Efficiency Calculator on this government website is excellent. This should be your starting point.
It will take you through what you should think about getting done, how you can apply for the Grant and who you can use to get the installations done.
The key steps are:
- Find out using the calculator what you are eligible for
- Find out the tradespeople who are approved to do the work and get a quote from them
- Apply to the government portal to get vouchers
- Once you get the voucher, organise with the tradesperson to get the work done!
Is it halal?
As the grant is just a payment of money by the government (and not a loan of some kind as it has historically been for other schemes) this Green Homes Grant is perfectly permissible.
However care should be taken for going for larger home improvements where the portion of your payment is going to be paid over time.
If you have arranged with the installer that you will pay slowly over time and they charge you a little more for that – that is fine.
But where they are involving some kind of loan company in the middle, then such an arrangement is not fine. You should typically avoid this.
If you’re unsure of anything, just drop us a line on the IFG Forum and we’ll pick it up.