We cannot reach net zero by 2050 without embracing the carbon savings available through retrofitting, improving our construction supply chains and developing a coordinated national plan for decarbonising the housing sector.
New figures published by the Office for National Statistics showing the energy efficiency of housing in England show the challenge we face to reach net zero. For records in the ten years up to March 2024, homes in England showed a median EPC score of 68 – but for properties built before 1930 the score was 60 and because 80% of UK housing will still be in use by 2050, it’s older housing stock where we need to make inroads.
It’s hugely encouraging that the new Labour government has embraced the challenge of meeting major environmental milestones. In particular, we now seem to have a government that recognises the need to retrofit the country’s existing housing stock. Making sure that these homes are all fit for purpose will have a massive impact on whether or not we can reach net zero.
Our historic lack of focus on residential retrofitting has in part been due to the wish to generate good headlines. Pledges to build new homes rather than retrofit old ones is always an attention grabber, particularly in election campaigns. But another key factor has been a lack of appreciation of the significant environmental wins that retrofitting offers.
The embodied carbon which our existing housing stock currently contains offers a great energy saving over the carbon cost of newbuild. Retrofitting is also more energy efficient than newbuild in creating homes which draw less energy from the grid and which contain significant renewables infrastructure connections, through electric charging points and air source heat pumps.
This Government has already committed to insulating millions of homes. But it would be a mistake only to focus on decarbonisation and insulation. Even if we had a plan to decarbonise the 28 million homes in this country tomorrow, this would not be possible because adequate building supply chains to support this are not currently in place. To achieve net zero by 2050, we will also need a laser-like focus on reducing energy demand from our buildings.
The Government will need to find the public funds to support retrofitting – keeping in mind the potential catastrophic cost at a level of climate resilience if we do not retrofit, and the undoubtable impact that this would have on making our housing stock fit for purpose.
The UK Green Building Council has calculated that around £64 billion is needed to decarbonise our existing housing stock efficiently. And in 2021, the Government advisory body, the Climate Change Committee estimated that renovating a typical family home to net-zero standard would cost on average £26,000 -an amount which is likely to be considerably higher in today’s market.
Given the levels of financing that are needed, it is imperative that public funding at least matches the private sector offer for the cost of retrofitting. Subsidies for green loans to homeowners who wish to upgrade their properties are the single thing with the most power to move the needle here. Reduced mortgage rates for homeowners who retrofit would also provide a massive incentive to undertake such works. Property owners should not be dependent on private borrowing from banks or mortgage companies in order to do the right thing when it comes to the environment and the longevity of our housing stock.
It could also be a game changer if the scheme which currently provides a VAT exemption for any efficiency improvements to properties – but which is slated to end halfway through this Parliament in 2027 – were to be made permanent. This month’s Budget is the ideal vehicle to do this.
The scheme also needs to be more widely publicised: VAT relief for retrofitting is currently available under the scheme, but many in the construction sector are not aware that it goes wider than solar panels and heat pumps, and therefore they continue to charge VAT at 20% for retrofitting work.
Overall, we need to move retrofitting up the agenda when it comes to housing stock. Labour has made an encouraging start in outlining its commitment to the cause – now we must hope for a national plan which pulls all this together.
