Retrofit, retrofit give us a Wave (2.2)

Latest energy efficiency measures in social housing a step forward but long-term stability and framework still needed, says legal expert

Recent Government announcements to improve energy efficiency in social housing are welcome but the market still needs long-term policy and funding certainty to create confidence and enable faster delivery of housing retrofit at scale, an energy law specialist says.

The Department for Levelling Up, Housing and Communities has confirmed plans to launch a consultation by early 2024 on minimum energy efficiency standards in the social housing sector, following the Social Housing (Regulation) Act recently gaining Royal Assent.

Separately, the Government has recently announced a Wave 2.2 of the Social Housing Decarbonisation Fund (SHDF), which is designed to upgrade social housing stock currently below Energy Performance Certificate (EPC) band C up to that standard. 

The new “top up” competition is expected to open to applications from local authorities, combined authorities and registered providers towards the end of November 2023 and will allocate up to £80m of grant funding from April 2024. 

But while welcoming the latest developments, Nathan Bradberry, Partner and Head of Energy and Infrastructure at national firm Bevan Brittan, said ministers would still need to do more to generate the confidence in the market necessary for long-term investment.

He said: “With a general election expected in the next 12 months, the UK government is uniquely placed to kick-start a green revolution in order to meet our net zero commitments and retrofitting the UK’s existing 28 million homes is a significant part of this. 

“While these recent announcements are a step in the right direction, the scale of the retrofit challenge requires a long-term policy and funding framework from across the political spectrum.”

Fewer than half of homes in England and Wales currently having an EPC rating of C or higher[1], while ratings service Moody’s has estimated it will cost between £12bn and £18bn to retrofit social housing units to EPC C by 2030-2035.    

And, although government initiatives like the SHDF will help deliver more comfortable, energy efficient homes and reduce carbon emissions, Nathan said that even those local authorities and housing associations who have successfully applied for Government funding would still need advice on a range of commercial and practical issues before they could proceed with their investment.

“We are currently seeing a number of clients having to balance the need to spend grant funding within fairly tight project timetables while ensuring that their selected delivery model for retrofitting homes adheres to relevant procurement legislation,” he added.

“We are helping them to navigate these issues and wider project considerations including occupier engagement, access to properties and managing delay risk.”

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[1]https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/ageofthepropertyisthebiggestsinglefactorinenergyefficiencyofhomes/2021-11-01