Is Retrofit Investable? Future Build 2025

Setting the Stage: The Financial Landscape of Retrofit 

Chairing the panel, Andy opened the discussion by acknowledging the scale of the challenge: achieving net zero in the UK’s housing stock requires trillions of pounds in investment. He highlighted that private finance must account for 65-90% of this investment, but the key question remains: how do we mobilise this capital effectively? 

Ryan from the Green Finance Institute outlined the current financial mechanisms available for retrofit, categorising them into four groups: existing finance models (such as green mortgages and unsecured loans), emerging solutions (like Property Assessed Clean Energy financing), large-scale infrastructure investments, and community-based financing options. The challenge, he noted, is that while there is money available, consumer demand remains low due to lack of awareness, misinformation, and difficulties navigating the process. 

Ryan also emphasised the importance of policy interventions, pointing to successful international examples like Ireland’s retrofit guarantee scheme. He suggested that a similar approach in the UK could significantly lower interest rates and encourage uptake. Additionally, he stressed the need for long-term policy stability, standardised retrofit accreditation, planning streamlining, national awareness campaigns, and workforce development. 

Energy Pricing and its Impact on Retrofit Investment 

A major issue raised during the discussion was the imbalance between electricity and gas prices. Ryan pointed out that as long as gas remains significantly cheaper than electricity, it will be difficult to make retrofit financially viable at scale. Even well-financed models will struggle if consumers cannot see immediate savings on their bills. 

The panel called for policy interventions to rebalance energy tariffs, suggesting that subsidies or tax incentives for retrofitted homes could help close the gap. The idea of a ‘green energy premium’ was also discussed, which would allow homes with renewable energy systems to benefit from lower costs. 

Unlocking Large-Scale Investment: The Role of the National Wealth Fund 

Jeremy of the National Wealth Fund provided insight into the fund’s investment approach. With a mandate to support net zero and regional economic growth, the fund has already facilitated £2 billion in retrofit investment for social housing by guaranteeing loans from major banks. However, Jeremy highlighted that a core challenge remains: while finance is available, funding mechanisms that ensure repayment streams are still lacking. 

Jeremy explained that in order for retrofit investment to scale, the economic model must shift from a niche, voluntary effort to a mainstream financial decision. He underscored that investors require clear, predictable revenue streams to justify lending at scale. The key barrier isn’t capital availability, but rather a lack of viable financial structures that integrate consumer affordability, risk management, and long-term return on investment. 

Retrofit as a Property Investment: A New Market Model 

Chris introduced an alternative approach: using property value as the primary driver for retrofit investment. His company’s Future Homes model acquires Victorian terraced homes, retrofits them with energy-efficient technology, and offers tenants zero-bills living. The concept, he argued, reframes retrofit not as a cost but as a value-enhancing investment, with properties appreciating by an estimated 10% following energy efficiency upgrades. 

This model, he noted, could be particularly attractive to institutional investors, who have so far been hesitant to engage with the UK’s fragmented retrofit market. However, he also flagged Stamp Duty Land Tax (SDLT) as a barrier to scaling this approach, arguing that tax incentives should be reformed to encourage retrofit at the point of sale. 

Challenges in Engaging Homeowners and Tenants 

Chris highlighted the significant difficulty in motivating homeowners to engage with retrofit. He pointed out that many people find the process overwhelming or unnecessary, despite the long-term financial benefits. The panel discussed how clearer messaging, simplified finance options, and a shift from 'retrofit' to 'home improvement' language could help increase uptake. 

Another key challenge is ensuring that tenants benefit from retrofit measures without shouldering excessive costs. The Future Homes model aims to address this by ensuring tenants experience zero energy bills, making the prospect of retrofit far more appealing. 

Consumer-Focused Solutions: Comfort as a Service 

Zachary introduced the concept of ‘Comfort as a Service’—a model designed to bridge the funding gap in social housing retrofit. Under this approach, landlords finance retrofit through private investment and grants, while tenants pay a fixed, performance-linked charge that ensures predictable, lower-cost energy bills. If the retrofit fails to meet guaranteed efficiency levels, tenants are protected from additional costs, shifting risk onto solution providers. 

Zachary noted that this model is particularly viable for larger-scale projects (1,000+ homes) but faces challenges when applied to underheated homes, where fuel poverty prevents tenants from affording even a reduced energy charge. He called for policy changes that would allow landlords to integrate retrofit costs into adjusted rent structures, providing a more stable financing mechanism. 

The Scalability of Retrofit Financing Models 

Jeremy and Zachary both stressed that retrofit financing needs to be scalable to attract institutional investors. One potential solution is the ‘retrofit aggregator’ model, where multiple properties are bundled together as large-scale investment opportunities. This approach would allow investors to deploy capital more efficiently, reducing risk and ensuring a higher return on investment. 

Jeremy also suggested that local and regional authorities could play a crucial role in bringing together smaller retrofit projects into larger funding packages, making them more attractive to private finance. 

Regional Finance and the Role of Local Authorities 

A key audience question focused on how regional finance could be structured to support retrofit at scale. Jeremy highlighted that some combined authorities are already exploring place-based investment funds, which integrate retrofit with broader decarbonisation initiatives, such as EV charging infrastructure. Ryan emphasised the importance of local authorities signposting residents to existing financial products, such as green mortgages, while also considering direct lending models to bridge gaps in private sector offerings. 

The Road Ahead: Overcoming Barriers to Retrofit Investment 

The panel concluded with a consensus that while retrofit is fundamentally investable, systemic barriers remain. Key takeaways included: 

• Addressing Consumer Demand: A national public awareness campaign is essential to demystify retrofit and increase uptake. 

• Developing Standardised Financial Products: Mortgage lenders, policymakers, and investors must work together to create retrofit finance solutions that are accessible and scalable. 

• Reforming Policy to Encourage Investment: Stamp duty reform, tax incentives, and adjusted rent models could accelerate investment. 

• Supporting a Skilled Workforce: Without enough trained professionals to carry out retrofit work, investment alone will not solve the problem. 

• Fixing the Energy Price Gap: Aligning electricity and gas prices will be critical to making retrofit financially viable for consumers. 

• Scaling Up Investment Through Aggregation: Pooling smaller retrofit projects into large-scale investment opportunities could unlock significant capital. 

In summary, the panel made a compelling case that retrofit is not just investable—it is essential. However, unlocking its full potential will require a coordinated effort between government, finance, and industry to create a viable, scalable, and consumer-friendly investment model.   Beyond financial and environmental considerations, it's crucial to recognize that retrofitting homes also contributes to healthier living environments. Improved indoor air quality, better thermal comfort, and enhanced natural lighting are direct benefits of energy-efficient retrofits, leading to healthier and more comfortable homes. The session ended with a call to action for stakeholders to collaborate in driving forward practical solutions that align financing with meaningful, long-term carbon reductions and social impact.