Which should take priority – new build or retrofit? It’s much easier in some ways for social housing teams to argue for investment in new build as a way of achieving decarbonisation targets, as at least the likely costs are broadly understood
But what about the tenants who are crying out for more affordable warmth and the other benefits of low carbon retrofit – in rural areas of the North, in particular, this is a major strategic priority. And nationally there’s no doubt that the energy efficiency of our existing housing stock is a bigger, more pressing problem to tackle.
Gary Cawley, director of CPC, offers advice on how to weigh up the options, based on the funding streams currently available and the experience of social housing clients in the North working with CPC to meet their decarbonisation goals.
It’s a growing dilemma. How do we meet the demand for low energy new homes at the same time as tackling the energy-guzzling old ones? Which should come first in the queue for public sector resources?
The vital role local authorities and registered providers have in addressing the ever-present housing crisis is now being compounded by the drive for net zero: around 75% of existing housing stock needs to be retrofitted to make it carbon neutral ready. The pressure is overwhelming, particularly when you also add in the other competing demand of investment in building safety.
This is as much a moral dilemma as it is a financial one – addressing cold, expensive-to-heat homes vs supplying high quality new homes – and my sympathies really are with those who are tasked with setting the strategic approach.
But if you are in that position, perhaps sharing some of our experience working with and talking to social landlords across the North might provide a bit of help.
Get to know your stock
First, let’s think about retrofit. All social housing providers are at different stages when it comes to getting to grips with this issue. Some already have their 30-year business plans in place and know their route map to 2050, while others – the majority – are not there, or have even yet to start the process.
The first step is always to get to know your housing stock. This might sound simple, but providers do have different levels of awareness of what’s needed, and it can be difficult depending on how large your stock is, its age profile, geographic location and type of tenure. In-house capacity and digital capability will have to be taken into account, so it may be sensible to seek third-party help.
Don’t skip this step though. It’s impossible to assess the scale of retrofit requirements or to make the right investment decisions without understanding where your stock is currently, so a thorough audit and assessment of housing need is going to be essential.
While some existing stock will have very low EPC values, the vast majority of the UK’s social housing actually sits at the upper end of band D or the lower end of band C, so it may be that there’s not too much work to do to get them carbon neutral ready.
Consider the funding streams available
A thorough look at where cash could be obtained will certainly help to build your 30-year forward plan, as you will need to know how much of the financial burden your own organisation will need to carry.
It’s fair to say that the money available from Government is better established and more robust for new build projects rather than retrofit.
For example, as in previous years, there’s a large pot of funding available for new build through the Affordable Homes Programme, with applications for the period 2021 to 2026 having recently opened, and with scheme-by-scheme bidding or multi-year strategic partnerships for longer-term developments. In total, £7.39bn is on offer through Homes England.
The government is also increasingly unlocking financial incentives for MMC solutions, and for good reason – MMC will enable your projects to be greener, finished quicker, and can be cheaper and delivered at scale.
For example, the Affordable Homes Programme contains stipulations with regards to MMC builds as part of its strategic partnerships, while there are also incentives contained within the New Homes Bonus scheme for MMC developments.
What’s more, Homes England is running a project to assess the benefits of MMC development across the country, while a governmental MMC taskforce has also been established with the same aim.
As we push ever forward to net zero, the government is sure to bolster its support for MMC as we seek more efficient ways to make our homes energy efficient and carbon neutral, so it’s an essential consideration for social landlords, not just in the future, but for today.
For example, CPC clients are already investigating and realising the benefits of MMC – such as Sheffield City Council, which recently trialled a volumetric solution for four new affordable homes with a view to extending this across its future portfolio, and Middlesbrough Council, which has constructed new office space this way for its burgeoning digital economy.
To find out more about how we can help you incorporate MMC into your development plans, see our Offsite Construction of New Homes (NH2) and Modular Buildings (MB1) frameworks. Our in-house experts will be on hand from the beginning of the process to provide advice and guidance.
Don’t get stuck worrying about technologies
How about the resources to support retrofit?
As we discussed in a previous blog on the Local Authority Delivery scheme, although this part of the Green Homes Grant has been popular and successfully delivered to date, the funding falls short of what we and the rest of the sector would like to see. Additionally, chancellor Rishi Sunak failed to give any indication of future policy with regards to the Green Homes Grant or other sources of retrofit funding.
The Social Housing Decarbonisation Fund is set to be made available in stages, beginning later this year, but again, not enough is known about the detail to provide any real confidence to the sector yet.
But some encouraging noises are also coming out of the private finance sector, where green products are starting to emerge for social landlords seeking to fund capital expenditure; for example, “sustainability-linked loans”. Such products could be available for both retrofit and new build programmes.
Where retrofit funding should be directed also raises questions though. Understandably, there’s some hesitation over the installation of new technologies, for example, especially with regards to clean heating, and what to adopt at this early stage.
There is some discussion about the potential for hydrogen heating and whether new mixed-fuel boilers can or should be installed, or whether we should now be installing all-electric heating, given more renewable sources are now used in electric power generation. There are also some concerns over air source heat pumps, and whether they can really live up to their promise as the large-scale solution to gas boiler replacement.
But please don’t allow the debate to get in the way of action.
All of these solutions are likely to have their place in the country’s route to retrofit. For example, we’re already seeing heat pumps installed in new and existing homes right across the country, and they are proven to work at scale in countries such as Norway.
They will require some research as to whether they will be suitable for your buildings as they will work better for some homes than others (e.g. those already off the gas grid), but there is a lot of technical advice and support available via the appointed suppliers to our Energy Efficiency Consultancy (N8C) framework – click here to find out more.
For those already on their retrofit journey, our Energy Efficiency Measures and Associated Works (N8) framework is available, giving you access to a range of local, pre-approved suppliers across a suite of 21 energy efficiency measures, for projects large or small. Click here to read more.
Whichever way your strategy takes you – towards new build or retrofit, or a balance of both – CPC is here to support social housing providers in the North and Midlands.