Insulating social homes would save residents more than £700m a year

Social housing residents would have their heating bills reduced by 42%, saving over £700m, if their homes were insulated and draught proofed, according to a new research by the National Housing Federation (NHF).

As the cost of living crisis worsens, this new report demonstrates the significant long term benefits of retrofitting inefficient homes for people on low incomes. These are homes whose Energy Performance Certificate (EPC) rating is below C.[i] 

The research reveals that a family in an energy inefficient social home (EPC D-G) will spend on average £1,343 a year on heating bills, based on the October Price Guarantee and potentially more once this ends in April 2023. If these homes were insulated and brought up to an EPC C rating or above, this would be reduced by 42% to £776, saving them £567 every year. The total saving for residents in all energy inefficient social homes, would be over £700m a year.

Social housing residents are already disproportionately affected by rising bills in relation to their income, but for those in inefficient homes the impact is two-fold. These residents will be forced to spend on average 5.7% of their income on heating bills, compared to a national average of 3.4%.Those in the least efficient homes (EPC G) will spend as much as 15.5% of their income on heating bills; this equates to two months’ income each year, nearly five times the national average.[ii]

England’s housing stock is among the oldest and least efficient in Europe, producing more carbon each year than all of the country’s cars. Whilst social rented homes are in general the most energy efficient when compared to private rent and owner-occupied homes[iii], and social housing providers are leading the way in retrofitting their homes as quickly as possible, there remains more than 1.2 million energy inefficient social homes across England.

Three-quarters of social housing residents rely on benefits to top up their income. Since benefit payments do not automatically rise to cover increased energy costs, as they do with rent increases, these costs must be absorbed in full by residents. This means that large numbers of families risk falling into poverty or debt as a result of these costs.

Housing associations are prioritising decarbonising their homes and plan to spend £70bn on retrofitting social homes over the coming decades. However, research by the National Housing Federation estimates it will cost a further £36bn to retrofit all their homes and meet the government’s 2050 net zero target.

The Conservative manifesto promised £3.8bn by 2030 to decarbonise social housing, and has so far committed about £1bn of this funding. However, to enable councils and housing associations to expand their programmes of retrofit and insulation at pace, the National Housing Federation is calling on the government to:

• Release the full £3.8bn promised in its manifesto for the Social Housing Decarbonisation Fund to enable social landlords to plan ahead for large-scale retrofit over a number of years.

Kate Henderson, Chief Executive of the National Housing Federation, said:

“Not only are poorly insulated homes one of the country’s biggest environmental polluters, they have now become a major culprit of the cost of living crisis.

“Whilst the government’s energy price guarantee is welcome support for now, it is not enough to protect people living in the least energy efficient homes from astronomic price increases, with some social tenants losing as much as two months’ pay on energy costs and forced to make impossible choices – such as risking getting into debt – to afford basic living costs. Looking ahead to April 2023, without well-targeted means tested support, social housing residents will be facing an even more extraordinary burden.

“Decarbonising social homes is a win win solution, and the faster it can be done, the greater the benefits for residents and the environment. Councils and housing associations have already started retrofitting their homes and the recent announcement of the next wave of the Social Housing Decarbonisation Fund is certainly welcome, but they need the long-term funding in place so they can ramp up the scale and speed of these programmes. We urge the government to prioritise retrofitting social homes, as a long-term solution to the energy, cost of living and climate crises.”

[i] EPC ratings assess the amount of energy used in a home and how costly it is to heat

[ii] Figures based on the October price guarantee

[iii] 57% of social homes are EPC A-C, compared with 37% of private rented homes and 30% of owner-occupied homes (NHF analysis of EPC data)

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