RS2: Striking the Right Balance Between Retrofit & Disposals

Fallon Warren – What Amplius Is Doing 

Fallon's role at Amplius is unusual: she leads both the retrofit programme and the strategic portfolio team, which means disposals and retrofit sit in the same hands. That joined-up responsibility shapes how Amplius approaches the problem. 

The starting position. Amplius has around 4,000 properties below EPC C, roughly 11% of their portfolio. They're currently delivering 2,500 improvements and are just securing additional funding to bring in another 1,000.  "Everybody's chasing that EPC C by 2030. Not sure we're going to get that. That is a huge target for a lot of us,  but it can't just be based on government funding. It's just not going to happen." 

They've made a strategic decision not to chase schemes. Rather than running behind grant funding, Amplius built the cost of retrofit into their business plan from the outset. Disposal receipts are ring-fenced into a dedicated pot for neighbourhood-based retrofit programmes. This gave Fallon the board backing to act on the right properties at the right time. "I've got some great board buy-in in terms of retrofits." 

Disposals are strategic, not reactive. Amplius only sells in areas where they're not planning to grow. In areas they've identified as future growth or densification zones, no disposal happens regardless of the property's current condition. When they do sell, the focus is on high-value, low-performing assets in the right locations -  keeping the number of homes sold as low as possible while maximising revenue. They did 98 open market sales last year and are targeting 150 this year. "What we try and do is look at our high value, low performing assets in those areas that we don't want to stay in. So we try to minimise the number of homes that we sell, but actually what are going to bring the most money in for us. So that ethical disposal is a big piece for us." 

Retrofit is planned around asset life cycles, not just EPCs. Amplius looks at component ages before deciding what gets done when. If windows and doors were replaced five years ago, those homes go to the back of the programme for external wall insulation - you don't want to rip out new windows when you've just fitted them. Scenario-based modelling by archetype and age underpins the whole programme. 

The framing has changed. Fallon made a point of saying they no longer use the phrase "safe quality homes", they talk about "healthy homes" instead. The key question in their retrofit assessments is not just what measures are technically appropriate, but how the occupant actually uses the home, and how to make it work for generations. "How does that person use that home and how is that going to be used for generations?" 

Data validation was a turning point. About a year ago Amplius did a major data exercise with two specialist organisations.  Getting the data right before committing to a programme prevents expensive mistakes. 

Resident engagement is where Fallon gets on her soapbox. Amplius has a 2% refusal rate, which she acknowledged is exceptional. The key is that residents are given a voice from the start. Community champions are used for peer-to-peer conversations. Residents aren't told what's happening to their home; they're involved in shaping it. "It's more of this is your home...”  Post-works feedback includes residents saying things like "I've got a new home"  and Fallon noted the visible pride that comes with that. 

Their Rushton neighbourhood project is being used as a model to replicate across other areas, and they're working with local businesses and community groups alongside the physical works. A video from that project is available. 

The no gas boiler commitment. Amplius has reached a point where they've committed not to fit any more gas boilers. Every replacement is now low-carbon heating. But before making that switch, they model each asset individually - "archetype by archetype" - to make sure no customer ends up in a worse fuel poverty position as a result of the change. 

Robin Thompson – Alternative Financing and the Stock Exchange 

Robin's background is in institutional finance - 17 years at a large international bank financing social infrastructure across Europe. He framed the rest of the session around a question he said the sector needs to answer: if government funding isn't enough and traditional balance sheet financing is under pressure, what else is available? 

The toolkit as it currently exists 

Robin briefly mapped the options housing associations currently use: 

• Traditional model innovation -  Fallon's approach at Amplius is an example of this working well. 

• Asset disposal to private buyers - brings in capital but reduces the social housing stock permanently, which sits uncomfortably with the long-term mission and with what regulators want to see. 

• Equity recapitalisation - gives up future revenue and some control in exchange for capital today. 

• Sale and leaseback - historically used to get financing off the balance sheet, but accounting rules have caught up. Lease payments are now treated as principal and interest, which hits Interest Cover Ratios (ICRs) and other debt covenants. Robin was direct: "It's not really a tool in the toolkit that works for the regulator, and that works for housing associations." It still has narrow uses in specific scenarios, but it's not the answer. 

The question he put to the room:

"What if through the newfound collaboration in the sector, we could together design a model that finances retrofit whilst protecting the sector's core requirements of operational control and ownership?" 

Introducing the Stock Exchange 

This is Community Foundations' concept -  still at blueprint stage and being tested with sector stakeholders. The core idea is a not-for-profit platform, operated for the benefit of its members, that does two things: 

1. Acts as a matching venue for housing associations looking to buy or sell stock within the regulated sector -  keeping homes social rather than moving them to private ownership. 

2. Provides a centralised financing mechanism for large-scale retrofit, giving members access to independent capital without damaging their balance sheets. 

Robin was careful to emphasise this is not a finished product: "This really is a blueprint and an idea that is neither finalised nor complete." The goal of presenting it was to get sector input into whether it could work and how. 

How the retrofit platform would work — the worked example 

Two housing associations (HA1 and HA2), each with 500 homes they need to retrofit but can't afford to. Under the Stock Exchange model: 

• Both housing associations sell their 500 units into the exchange. 

• Both enter into a rental shortfall guarantee on the portfolio they've sold in. 

• HA1 then leases HA2's portfolio (and vice versa), maintaining their operational footprint. 

• Both get an option to buy the other portfolio for £1 at the end of the financing term. 

• The Stock Exchange raises finance from institutional investors (insurance companies, pension funds) secured against the properties, guarantees, leases and reserves. 

• The Stock Exchange uses the finance proceeds to fund the retrofit works and transfers the balance to the housing associations as a day-one capital receipt. 

• A 12-month debt service reserve covers any rental shortfalls. 

The critical accounting point Robin stressed: because you are not leasing back your own properties - you are leasing a different portfolio -  it should be treated as a true sale rather than secured finance, meaning it does not gross up your ICR or other debt metrics. This is the design feature that distinguishes it from traditional sale and leaseback. As Robin put it: "It's a way of retrofitting at large scale, but without hitting ICRs." 

The platform itself would be run as a not-for-profit Registered Provider, holding freeholds in trust during the financing term -  no operations, no asset management beyond oversight. Individual projects would sit in separate subsidiaries so that if one failed, it wouldn't bring down the whole structure. 

The questions from the room 

 Key points raised: 

What's in it for funders? Robin explained these would be institutional lenders e.g.  pension funds, insurance companies,  who need to deploy capital and want stable, secured returns. The Stock Exchange model gives them security on the properties, rental guarantees, reserves and the underlying covenant strength of housing associations. "Does it work for the funders? Does it get them the ratings of the housing associations that underpin it? Are they secured? And does it service the debt appropriately?" 

Who takes the upside if property values rise over 35 years? The housing associations,  not the funder. This is not an equity investment. Funders get their stable return; the long-term asset value stays with the sector. 

What happens when a tenant exercises Right to Buy? Robin acknowledged this is a genuine gap in the current blueprint and committed to working through it. 

Does it need to be set up as a monopoly, or could it be established by the industry working together? Robin's view was that the sector should design the model first, then go to the finance market and put funders in competition,  rather than letting individual funders drive the model design. Fragmented, funder-led approaches have created complexity that actually obscures competitive pricing. 

What about the practical complexity of matching two housing associations? Robin acknowledged this is significant: geography, asset quality, archetype, retrofit approach and long-term strategy all need to align. He suggested that focusing on specific typologies - hard-to-retrofit property types -  and then finding who has them might be a practical way in. 

What about replacement of retrofit measures over the 35-year term? A heat pump may need replacing twice in that period. Robin said the model includes sinking fund reserves built into the day-one financing to cover future replacements, but acknowledged this is one of the genuine practical frictions to work through. 

Could this also be a delivery mechanism for government grant on the hardest-to-retrofit assets? Robin thought yes - a centralised platform with a large data model is exactly the kind of infrastructure that could receive and deploy grant funding efficiently, particularly for assets that don't stack up under private finance alone. 

Key Takeaways 

1. You can't retrofit your way out of financial pressure without a strategy, and the strategy has to come before the funding. Amplius's success comes from having decided what their portfolio should look like long-term, and then using disposal receipts, board-backed budgets and grant funding together to get there. Chasing schemes without that plan leads to piecemeal outcomes and the wrong measures in the wrong homes. 

2. The financing gap for large-scale retrofit is real, and existing tools-  sale and leaseback, equity recapitalisation, disposal - all come with costs that can undermine the social mission. The Stock Exchange concept is an attempt to design something new from first principles: asset-level finance that keeps homes in the sector, protects operational control and doesn't wreck balance sheets. It's a blueprint, not a product, but the principles behind it are worth engaging with. 

3. Resident engagement is not a nice-to-have  it's what makes the programme work. A 2% refusal rate doesn't happen by accident. It comes from treating residents as participants in improving their home rather than recipients of works being done to them, using community champions for peer-to-peer conversations, and making sure people know what to expect and how to use what's been installed afterwards. 

 Reflection Questions for Housing Providers 

1. Do you have a clear long-term portfolio strategy that defines where you want to be in 20 years, and is your retrofit programme genuinely aligned to that, or is it still responding to whichever funding scheme is available? 

2. When you're weighing up disposal versus retrofit on a difficult property, are you looking at the full picture -  neighbourhood strategy, asset life cycles, resident need and long-term ownership -  or is the decision being driven primarily by the immediate cost gap? 

3. The Stock Exchange is explicitly a sector-designed solution that requires housing associations to come together. What would your organisation need to see - in terms of governance, regulation and practical detail - before you'd be willing to explore it as part of your financing toolkit?