New retrofit funding for Scottish social housing

New finance arrangements are being put in place in Scotland to encourage landlords to retrofit social housing properties and help encourage the drive to net zero, according to a new report.
Financing and funding the decarbonisation of Scotland’s social housing by infrastructure body the Scottish Futures Trust (SFT) explains that Scotland has more than 625,000 social housing properties (approximately one in four of all Scotland’s homes), which are owned by local authorities and Registered Social Landlords (RSLs).
To achieve Scotland’s net-zero targets, it says “many homes will need both the retrofit of clean heating technologies (such as heat pumps or connection to heat networks) and improvements to energy efficiency”.
The investment needed to deliver these measures across the sector will be “a significant challenge where support from the private sector is needed”, adds the report.
SFT has drawn up a range of investment models to provide RSLs and councils with cost-effective solutions to retrofit their properties which can be used in “a variety of ways depending on how landlords can access borrowing and also the number of properties they own”, says the report.
Toby Tucker, associate director at the Scottish Futures Trust, who led on the report, said: “Delivering energy-efficient housing with clean heating systems will not only reduce carbon emissions, but can also deliver socio-economic benefits, where warmer, more comfortable homes can significantly improve health.
“In preparing this report, we engaged with many stakeholders who identified a keen interest in strengthening and developing the current support that is available via the Social Housing Net Zero Heat Fund (SHNZHF).
“The enhanced support recommended in this report aims to provide immediate support to all social landlords, and importantly provides an initial step for further working with the sector to catalyse the development of future financial models.
“Based on our analysis, the most likely model to succeed is the ‘aggregator approach’. This offers the opportunity to use public sector capital to lever in more private sector investment at a lower over-all cost of finance, and ultimately provides an enhanced ‘one-stop-shop’ support for both project development and financing of net-zero installations.”
Among other significant recommendations from the report are developing clarity on the social housing net-zero requirements and developing a central resource allowing for the gathering and sharing of installation data and materials costs, as well as information on the performance and net savings achieved for energy efficiency and clean heat deployment.
It is anticipated that providing social landlords with direct access to this data will be key to helping inform, develop, evaluate and deliver net-zero retrofit projects.
Sally Thomas, chief executive of the Scottish Federation of Housing Associations (SFHA), said: “Reducing carbon emissions and integrating clean sources of heat into our social homes is arguably the biggest challenge facing housing associations today, which is why this report makes for essential reading.
“SFHA fully supports the recommendation to strengthen the Social Housing Net Zero Heat Fund because our transition to net zero must be fair, it must be just: tenants cannot foot the bill through higher rents, which would be the only way not-for-profit housing associations can fund it if additional money can’t be found.
“So our housing associations require funding solutions which allow them to significantly accelerate their retrofit projects at scale while not affecting rents, and we look forward to discussing this and the rest of the report’s findings in our continued engagement with the Scottish Government.”
Syntegra MD Alan King said: “This is a welcome move to encourage improvements in a key area of building stock. I hope it can be implemented across the whole UK, not just in Scotland – it is too important to be confined to one area alone.
“Sharing good practice and access to new and existing initiatives is key to the widespread take up of net zero opportunities, many of which do not have to be excessively expensive, but it is important that landlords and small businesses are made aware of what is out there to help them play their part in this journey.”