Retrofitting existing homes to meet the Net Zero 2050 target remains a key challenge. According to the Energy White Paper published in December 2020, 16 million households in England (66% of the total) have poor energy efficiency ratings, with Energy Performance Certificates of D or below. That means a huge level of investment is required if the UK is to meet its commitment.
To support the upgrade of existing homes, the Government launched its £2 billion Green Homes Grant in July 2020. At launch, the Grant consisted of a voucher scheme (enabling homeowners to apply for vouchers covering two-thirds of the cost of the energy efficiency improvements) and a Local Authority Delivery Scheme (LADS). There were problems with the roll-out of the voucher scheme from the beginning and in March 2021 the Government announced its early closure.
But all is not lost. With the voucher scheme abandoned, the Government's flagship support policy now relies on the LADS to deliver the required support. While funding has already been allocated under the first three phases of the scheme, an additional £300 million has been reallocated from the voucher scheme, which gives more opportunity for local authorities to bid for funding to upgrade homes in their area.
The funding is targeted at low income and low energy performance homes (ie those with household incomes of less than £30,000 and Energy Performance Certificate ratings generally between E to G). The funded upgrades can include insulation works, solar panel installations and the replacement of gas boilers with low carbon alternatives such as heat pumps.
Funding is available for all tenure types including social housing properties and local authority owned housing. For rented properties (including social housing), the average LADS subsidy should not exceed £5,000 per household and landlords are expected to contribute to at least a third of the overall costs of the upgrade works.
When funding retrofit works, landlords will need to be aware of the rules surrounding the blending of funding. While LADS funding can be used alongside third party financing or Local Authority budgets, care needs to be in taken in relation to the interface of the LADS grant with other government schemes such as the Energy Company Obligation (ECO), the Renewable Heat Incentive (RHI) or the Social Housing Decarbonisation Fund Demonstrator. The different schemes cannot be used to fund the same individual measure. However, in specific circumstances it is possible to blend government funding at a single property where different installation measures are being implemented (eg heat pump installations may be funded via LAD whereas wall insulation is funded via ECO).
Landlords planning energy efficiency upgrades should consider the potential for LADS funding, but should act quickly. Rumours are that the Green Homes Grant is set to be rebooted in the Autumn. When looking for further government funding opportunities for energy efficiency upgrades, landlords can look towards the Social Housing Decarbonisation Fund targeting the energy efficiency of social housing (applications opening in Autumn 2021) and the Clean Heat Grant, set to provide an upfront contribution to the costs of installing low carbon heating installations (due in April 2022).
