Finance: overcoming social housing retrofit’s biggest barrier

Turner & Townsend’s Richard McWilliams looks at how funding can be unlocked to upgrade existing housing in the fight against climate change.

When we talk about achieving net zero in England, the elephant in the room is our housing stock, which is the oldest in Europe. It comprises some 25 million draughty and inefficient homes, of which a substantial four million are part of England’s social housing sector.

It is clear that tackling climate change will mean retrofitting these buildings, and fast. But the barriers to the delivery of this goal are numerous, and the central issue is finance.

For a sector that suffers from chronic underfunding and sits at a tangent to the usual push and pull of market forces, finding a secure and manageable way to finance this vast programme of necessary work is especially challenging. Solving this requires a two-pronged approach: providing immediate grants and support to social housing providers, while also giving confidence and investment to the sector so it can grow and reduce the market cost of retrofit.

The benefits to be gained from this are substantial. Not only will improving the energy performance of social housing help mitigate the impact of climate change, it will do so while supporting some of England’s most disadvantaged communities: reducing fuel poverty, improving quality of life, and creating new local jobs and industry built around retrofit.

“Not only will improving the energy performance of social housing help mitigate the impact of climate change, it will do so while supporting some of England’s most disadvantaged communities.”

Richard McWilliams, Turner & Townsend

The new Social Housing Retrofit Accelerator (SHRA) tackles the problems of funding head on – providing social housing providers across England with support to apply for the £160m first wave of the government’s £3.8bn Social Housing Decarbonisation Fund (SHDF). The SHRA is itself fully-funded by the Department for Business, Energy & Industrial Strategy (BEIS) and is being delivered by Turner & Townsend on behalf of the Greater London Authority.

This free support and advice gives direct access to sector expertise and best practice, including an in-depth knowledge hub, workshops and webinars, and crucially tailored one-to-one support to the English local authorities leading bids either individually or as part of a consortium. The consortia may include housing associations from major players through to smaller local operations. 

The aim is to help providers produce high-quality bids for this round of SHDF and ultimately beyond. So while the focus of funding deals with the finance dilemma, the development of these bids with the input of experienced specialists in retrofit also tackles many secondary issues of social housing retrofit.

This includes addressing problems that are particularly acute for social housing, such as the need for greater digital transformation, but also the sector-wide systemic issues: providing an investable pathway to mass retrofit for the whole construction sector. 

Government backing on this scale, when well-targeted by industry experts, can help build the supply chain for retrofit, reduce the market costs of the measures, and tackle the ongoing skills challenge as well as making a major contribution to reducing fuel poverty.

And it doesn’t end here. This project is only the latest element of the government and the mayor of London’s programme of measures to accelerate investment and industry capability around retrofit of all building stock types, from homes to offices, schools and hospitals. The benefits will ripple across the construction sector, building further expertise and knowledge, strengthening localised retrofit supply chains, and delivering a great step forward on the road to make our built environment net zero.

Richard McWilliams is director, sustainability, at Turner & Townsend

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