The cost-of-living crisis is set to deepen as we head into the autumn, with energy bills expected to rise to £3,000 a year for the average household. Fuel poverty is usually attributed to three key factors: the level of household income, the quality of housing in terms of energy efficiency and the cost of energy bills.
The government is rightly focused on making new and existing buildings more energy efficient as part of the UK’s overall commitment to Net Zero but there is also a clear social justice element to domestic energy bills. According to the Chartered Institute of Housing, 9 million people on low incomes live in energy-inefficient homes.
At SASC, we focus our efforts on two areas that speak directly to both these social and environmental goals. Transitional Supported Housing (TSH) and Community Renewables.
TSH is the provision of housing with a package of support designed to help disadvantaged individuals move back to independent living. Community Renewables projects involve the clean energy and carbon savings that come with any renewable asset, but SASC also ensures that some profit is returned to the local community for projects and support around fuel poverty.
As our name suggests, our financing looks to create social and sustainable solutions to pressing problems. That is why we help TSH charities to purchase, renovate and retrofit housing, to make homes as energy efficient as possible.
SASC is supported in this by Terrie Alafat, who sits on our board. As the former chief executive of the Chartered Institute of Housing, and before that director of housing in the then Department for Communities and Local Government, Terrie now holds several non-executive positions in housing and homelessness. She has also recently been the chair of the Building Back Britain Commission, which was set up to offer government and others constructive policy ideas and thoughtful solutions on housing, Levelling Up and Net Zero.
The Building Back Britain Commission’s second report looks at the challenge of decarbonising our housing stock. In this blog, Terrie summarises its findings.
Building Back Britain: Net zero and the housing challenge
I have been privileged to chair the Building Back Britain Commission and to work with other senior leaders in housing and the building industry to consider how to move forward on two key agendas – levelling up and achieving zero carbon ambitions for our homes. We have been ably supported by WPI Strategy on policy development and economic analysis by Chris Walker.
Net Zero and the Housing Challenge is our second report. The analysis of the housing markets in the report builds upon many of the conclusions reached in the first report on levelling up and in particular illustrates the challenges of housing retrofit in areas prioritised for levelling up.
The energy crisis facing the UK emphasises the importance of the Net Zero agenda. We need to make our homes more energy efficient and reduce fuel poverty. The report explores both the challenge of decarbonising existing stock and building highly energy efficient new homes. We will not meet the zero carbon targets by building our way out of the problem. We also need to see major reductions in carbon emissions from existing homes. In this report we have undertaken detailed analysis of existing homes to map the retrofitting needed, area by area.
In the average local authority over 58% of homes are below EPC band C (which is the target to reach by 2030) and the cost of getting all homes in the country up to this standard is over £200 billion. The analysis identified five key risk factors: low current EPC ratings, old housing stock, conservation requirements, low market value, and EPC band C being unattainable in some cases given currently available technologies.
The analysis of existing stock shows significantly higher barriers to retrofitting homes in local authority areas designated as high priorities for levelling up, largely as a result of low property values. In many areas retrofit will be financially unviable without government subsidy, because the cost of retrofitting is such a large proportion of – or even more than – the market value of the home, even after it’s been improved.
The report concludes that government attention should be focused on low value housing in these areas as without government action and subsidy it is clear that progress towards zero carbon will not be possible. As well as making progress towards zero carbon ambitions, measures in these areas would help tackle rising fuel poverty.
We also cannot ignore what can be achieved in new housing developments. With one in five homes that will exist in 2050 yet to be built we must push forward with building in a way which ensures homes will reduce emissions. There are many good examples in the report of builders already taking a progressive approach to this issue and we must learn from the best and adopt forward looking building practices.
We acknowledge in the report the role of the private sector alongside government in achieving carbon reductions and conclude with five key recommendations:
- Over the next decade householders in low-value homes, where the cost of retrofitting is unviable, should be provided with grants
- Householders in higher-value homes should be able to access low interest, unsecured loans (at a cost similar to government borrowing)
- Funds from planned government investment should be used to create new incentives via research and development tax credits for the uptake of net zero construction technologies
- Government should consult on how to improve the take up of green mortgages and review property taxation to consider whether there are changes which would drive demand for more energy efficient properties
- Government should create ‘housing decarbonisation zones’ in recognition of the challenges posed by older homes beyond realistic repair. Homes England should work with local authorities to develop plans for these areas.
The full report can be read here.