Policy, Funding and the Changing Landscape

“We can’t really meaningfully plan as a sector until we get the details of what we need to meet and how we need to meet it.”

Kate Macdonald, Policy Advisor at the National Housing Federation, summed up the mood among social landlords as the retrofit landscape shifts beneath them. Alongside her, Jonny Page, Clean Energy Infrastructure Lead at the Green Finance Institute, brought a finance lens to the same question: as funding becomes more regional and grant budgets tighten, how can providers secure the investment they need? With many NHF members in the room, the session quickly became a lively open discussion.

Three things the sector still needs

Kate welcomed the Warm Homes Plan as a good start, noting how government has moved the conversation towards bills and housing quality as net zero becomes more politicised. But detail on future scheme design, expected in the spring, is still awaited in October. She set out three gaps.

• Funding clarity. What the schemes will look like, how much is available and how to access it. The NHF asked for £3.7bn for housing associations between 2027 and 2030, based on a National Infrastructure Commission recommendation. The plan offers £3bn, to be shared between housing associations and local authorities.

• Devolution clarity. A white paper is expected around the Budget or later in November. Retrofit is further along the devolution path than development, with Greater Manchester and the West Midlands as reference points.

• Policy clarity. Outstanding detail, including the Home Energy Model [1] and minimum standards, which landlords need before they can plan with confidence.

Following the money

Jonny said the clearest lesson from European countries that have decarbonised heat successfully is that they engaged municipalities and regions on both policy and finance. GFI’s focus is on mobilising more capital, reducing risk and making retrofit cheaper.

Upcoming low interest loans for homeowners will be “a really critical moment”, testing whether people actually want them. Encouragingly, lenders remain keen despite being burned by the Green Deal.

He also challenged assumptions about grant. International evidence, including high heat pump grants in Germany, suggests generous grants can push up overall costs. GFI’s alternative is to recycle public money. In heat networks, for example, existing grant could become junior debt that de-risks senior lending [2], lowering the cost of capital and, over a project’s life, the tariffs residents pay. Recycled funding also improves the private to public capital ratio that the Treasury wants to see. National Wealth Fund guarantees, originally a GFI recommendation, are now available, but “it needs to happen faster”.

“The more private sector capital we can get into these sectors, the better.”

Jonny Page, Green Finance Institute

Jonny highlighted two newer tools. The first example of demand aggregation finance, buying assets in bulk to cut costs across projects, is now live for solar. And Community Municipal Investments [3] are scaling up: 19 councils have raised £30m this way, 89 per cent beat their PWLB certainty rate, and pricing averaged 29 basis points below it. Councils can use them today without any rule changes.

Grant: better, but still a burden

Responding to a question from a London housing association, Kate said reaction to Wave 3 of the Warm Homes: Social Housing Fund has been far more positive than to Wave 2, thanks to constructive work between the sector and DESNZ, including consortium routes for smaller providers. Barriers remain, though: minimum project sizes, limited in house capacity, local restrictions on technologies, workforce shortages and monitoring requirements that are not costed into the grant. Some landlords previously chose ECO simply because it was easier to manage.

Others in the room put it more bluntly. Grant is “not free” once the resource needed to win and manage it is counted, and for some a “good enough” programme without grant may be simpler than a “gold plated” one with it. Kate also flagged concern about over reliance on loans and innovative finance, especially for fabric measures, where no workable model yet exists.

Devolution: ready or not

Several members questioned the timing. One described the jump to devolution in the middle of Wave 3 as “chaotic”, noting that some regional authorities in London were “not ready at all”. A contributor from the East Midlands said its young mayoral authority had described

itself as “flying a plane whilst building it”, and asked how housing providers could shape regional policy rather than simply receive it.

Kate stressed the NHF is not against devolution, but even Greater Manchester, a well established authority, took longer to deploy Wave 3 funding than the central DESNZ route, and “that’s almost the best case scenario”. Her advice was to build relationships early with the housing, delivery and public health teams of strategic authorities, so that when schemes are designed “you’ve got people that they can pick up the phone to”. She is also pressing for national consistency in applications, reporting and eligible technologies: with new minimum standards coming, different rules in each region would be “absolutely not workable”.

Who sets the rules?

A client side construction specialist argued that the sector lacks a rule setting body to define commercial models, manage supply chains and reward success in a construction industry that is low margin, volatile and struggles with short term contracts. That, he said, is why the idea of Home Improvement Corporations from the earlier session appealed. The chair added a call for outcome based procurement, buying a guaranteed level of performance or warmth rather than a list of measures, backed by proper measurement.

Others saw private finance at scale as the most promising route, combining fabric, heating, solar, batteries and energy market income into packages funders can back repeatedly. But housing associations remain compliance driven and risk averse, balance sheets are constrained, and investors still need to understand social housing. Jonny’s tip was to bring a lender’s whole investment chain, including credit risk teams “whose job is to say no”, into the room early.

A sponsor made the final point: current business as usual risks are rarely quantified, so landlords underestimate how much risk these models could take off them. Jonny agreed, linking residents who cannot afford to heat their homes to a higher risk of damp and mould.

Health co-benefits The discussion closed on cold homes. Residents who struggle with bills are the most likely to switch heating off, raising the risk of damp and mould and the harm that follows. Closing the session, the chair warned that rising energy costs mean many, many more residents could struggle to heat their homes to a safe temperature this winter. Counting these health and condition risks properly is part of making the investment case for retrofit.

Questions for housing providers to reflect on

1. Do you have working relationships with the housing, delivery and public health teams at your strategic or combined authority, ready for when devolved retrofit funding arrives?

2. What does grant really cost your organisation once bid writing, monitoring and compliance are counted, and would recycled or blended finance offer better value for parts of your programme?

3. Have you quantified the risks of doing nothing, including cold homes, damp and mould and arrears, so that investors and your board can see the risk retrofit takes away?

Key takeaways

1. Clarity is the priority. Funding, devolution and policy detail are all still outstanding, and landlords cannot plan with confidence until they arrive.

2. Grant alone will not get us there. Recycled public money, guarantees, demand aggregation and municipal bonds can stretch scarce funding further and draw in private capital.

3. Get close to your region now. Devolution is happening faster than many authorities are ready for, and providers who build relationships early will help shape what comes next.

[1]Home Energy Model: the government’s replacement for SAP, the methodology used to calculate the energy performance of homes. It will underpin future EPCs and standards.

[2]Junior and senior debt: senior lenders are repaid first, so carry less risk and lend more cheaply. Public money placed as junior debt absorbs early losses, making private senior lending safer and cheaper.

[3]Community Municipal Investments (CMIs): bonds that let local people invest in a specific council project, usually climate related. PWLB (Public Works Loan Board) is the standard source of council borrowing.

Retrofit Society 2:0 , October 2026, panel write up

Image credit: Healthy Homes Hub