Answer: The Assignment of Rights (AoR) allows homeowners to install renewable heating with financial help from a nominated investor. Subsequent RHI payments are redirected to the investor as a form of repayment. These changes are effective from June 2018.
For more information about the Assignment of Rights for homeowners and landlords, keep reading this article. If you want to know more about becoming an investor, read our article about becoming an investor.
Firstly, a quick introduction to the RHI scheme. The RHI scheme is designed to increase uptake of renewable heating solutions in the UK. The government launched the Domestic RHI scheme in 2014.
The Domestic RHI scheme is aimed at homeowners. The Non-domestic RHI scheme is for commercial properties and district heating schemes. The Domestic RHI scheme pays over the course of 7 years, whereas the Non-domestic RHI scheme pays over the course of 20 years. At the time of writing, the Assignment of Rights (AoR) is only applicable to the Domestic RHI scheme.
You can download our guide to the Renewable Heat Incentive scheme HERE.
A major barrier to renewable heating uptake is initial expense. Whilst there are huge savings (and earnings) to be made over the long-term, the initial capital outlay can be prohibitive. It’s an attractive investment, of course – but it can still be a big decision.
The Assignment of Rights makes it easier for homeowners and landlords to install heat pumps, biomass boilers, and other renewable heating technology. This development means that a separate investor can fund the initial purchase of the system, and potentially the ongoing maintenance (depending on the agreement). In return, the homeowner assigns RHI payments to go to them as a form of repayment. The authorities refer to this as the “nominated investor”.
The Department for Business, Energy, and Industrial Strategy (BEIS) has announced this update to RHI, as a key method of increasing uptake.
All applicants are required to be the proven owner of the renewable heating technology, and thus able to apply to the Domestic RHI scheme. As part of this process, the applicant can distribute all ongoing RHI payments directly to the nominated investor. The nominated investor must be registered and approved.
In order to register as an investor for the Assignment of Rights, the investor must meet a number of conditions. Ofgem must be involved in granting permission. All conditions are outlined in the article, linked underneath this paragraph. If you have any questions, contact Smart Renewable Heat.
First and foremost, you must be the owner of your renewable heating system. The investor will not and can not own any part of the system itself.
The process of applying for the Assignment of Rights is not overly taxing, although contracts must be watertight. You can apply for the Domestic RHI scheme online, as long as you meet the requirements. As part of this process, you will be prompted to assign payments to your nominated investor. You will need a unique reference number to assign rights over to the correct investor. They need to be approved and listed in the system before you select them.
If your renewable heating system and property meets official standards, and you qualify for the Domestic RHI scheme, the Assignment of Rights process is straightforward, although there is an extra contractual agreement to review before you press ahead with installation.
The investor and participant must agree on a contract with which to manage the Assignment of Rights agreement. Ofgem will review suitability as part of the registration process, and will have reviewed a “model” contract in order for the investor to be registered in the system. Both parties will need to agree to a final contract agreement in order for the AoR to commence.
Homeowners must check their contracts very carefully to ensure that they are entering a suitable agreement for the long-term. These are some of the key aspects that should be addressed in the model agreement creation. These considerations will provide security for the long-term.
System installation and purchase: What sort of disruption can be expected, and who is liable if the installation damages part of the home? What about injury? Who is obligated to comply with planning rules, and what happens if there are problems with building control?
Service and maintenance: Who is responsible for fixing breakdowns? What happens if the system fails and RHI payments stop? Are maintenance fees included in the investor’s package?
Financials: Is the investor paying for the full system, or just a percentage of overall cost? What happens if payments fail or get delayed? Who pays for the purchase of fuel supply? Do you need legal advice in order to understand the rights associated with loans? What about other costs, like reports and surveys?
Communications: How will you and the nominated investor communicate with the relevant authorities? Can everything be done over the internet?
Contract termination or ending: What happens if the homeowner moves and the new owners don’t want the renewable heating system and AoR? What if they want to switch to a new investor? Are new homeowners able to pay off the costs earlier than planned?
All of these terms must be totally transparent, and entirely consented by both parties. As you can see from the complex considerations above, legal advice is certainly recommended for the creation of AoR model agreements. The process is simple once these issues have been ironed out. If your nominated investor has worked with the Assignment of Rights before, they may have done the legwork and will be able to supply a draft template to make the process smoother.
The terms of the Domestic RHI scheme must be met at all times. Compliance with these rules is essential to gaining RHI payments after initial qualification, and is therefore important to you and your nominated investor. These terms for ongoing obligations are outlined in detail on the Ofgem website.
In a nutshell, you must: keep equipment readily maintained, use BSL fuel, inform Ofgem when the equipment is out of service (or broken), inform Ofgem when you move home, inform Ofgem when you replace or reform a part of the system, and inform Ofgem if metering is required.
If you are moving home, the new owner will likely take hold of the AoR agreement. You will also be able to switch investors, if all parties agree to terms. This is something to iron out in the contract stage.
We are experts in renewable heating, and we can help you with the Assignment of Rights process for Domestic RHI. If you’re thinking of entering into an AoR agreement with a nominated investor, we can help iron out the process. Furthermore, we will take care of the installation and maintenance of your chosen renewable heating technology.
Please contact us using the form below, or call us on 0800 865 4328.