Homeowners will be able to take out loans for thousands of pounds to pay for insulation and solar panels, under legislation proposed by the government.

Well-off homeowners will be expected to borrow more than £7bn over the next decade to meet ambitious government energy saving targets announced today.

Local authorities will be encouraged to borrow the money needed to make buildings greener and meet local carbon emission reduction targets, for example by entering into public-private partnerships.

Energy suppliers will be required to meet about 60% of the estimated £18.6bn cost of insulating most of the UK’s homes, for which the poorest households will not have to pay. Suppliers will pass these costs on to their customers, but energy secretary Ed Miliband insisted the targets would not lead to additional utility bill rises.

Under legislation proposed today, homeowners would be able to take out loans for thousands of pounds to install loft or wall insulation or solar panels. These loans would be fixed against the home, so that if the borrower moved out, they would not have to continue to pay.

The new owner would inherit the annual charge to pay for the green measures, but would also continue to benefit from the resulting lower energy bills. The government said that the finance – expected to come from retailers such as B&Q and banks including the Co-op – would initially be available on a small scale from 2012, although this would improve.

The government said that cavity wall and loft insulation should be installed in every home where possible by 2015. It also said that up to 7m “eco-upgrades”, involving the installation of micro-generation technology such as heat pumps and solar panels, should be carried out by 2020. Energy companies such as British Gas will also be required to work more with local authorities to upgrade entire streets and areas.

Under the government’s energy efficiency scheme, companies can mostly target who they like on a piecemeal basis, leading to criticism that many householders who are difficult to contact – usually those on lower incomes – do not benefit.

John Healey, the housing minister, said: “Some energy companies dealing with individuals at the moment are calling the shots. But under the new system they will have to work with local authorities.”

Miliband also promised there would be more monitoring of companies’ activities for the future scheme, which will run from 2013 to 2020. Andrew Warren, director of the Association for the Conservation of Energy, welcomed the announcement but said: “We can’t afford a laissez-faire attitude and the assumption that everyone is a decent chap. The record to date on monitoring has not been good.”

Source: http://www.guardian.co.uk