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National policy

The government set out their ten-point plan for a green industrial revolution. Covering clean energy, transport, nature and innovative technologies, the blueprint is designed to meet its contribution to climate change by 2050.

The plan will mobilise £12 billion of government investment to create and support up to 250,000 highly skilled green jobs in the UK, and spur over three times as much private sector investment by 2030.

Homes and public buildings

Making our homes, schools and hospitals greener, warmer and more energy efficient, whilst creating 50,000 jobs by 2030.

To reduce the level of carbon emissions in housing and to improve energy efficiency Government has set out a range of measures for new build housing and existing housing, including a target to install 600,000 heat pumps every year by 2028.

New build policy - Future Homes Standard

Launched in 2019 the Future Homes Standard proposes a new approach to housebuilding with the aim of:

  • reducing carbon emissions
  • ensuring new homes are comfortable to live in
  • keeping fuel bills down, by encouraging low energy efficient systems
  • eliminate the use of gas in new homes from 2025

The primary mechanism for prescribing and regulating building is through Building Regulations and the Future Homes Standard was accompanied by consultation on changes to Parts L (conservation of fuel and power) and F (ventilation) of the Building Regulations.

From 2025, new homes will produce 75-80 per cent lower CO2 emissions compared to current levels.

These homes will be 'zero carbon ready', with the ability to become fully zero carbon homes over time as the electricity grid decarbonises, without the need for further costly retrofitting work.

Low-carbon heating systems will be installed in all new build homes.

It's anticipated that the systems in these new developments will include heat pumps (air and ground source), heat networks, hydrogen and direct electric heating.

Reducing carbon emissions in housing will be achieved through a combination of improving the thermal efficiency of the building, thereby reducing the amount of energy that is needed to heat our homes and the use of low carbon technology.

Improving the efficiency of the building will be achieved through a range of measures, including insulation and thermally efficient double or triple glazing.

Benefits of energy efficiency

EPC F and G rated properties are the most energy inefficient properties in the national housing stock. They impose unnecessary energy costs on owners, tenants and the wider economy and can lead to poor health outcomes, with a resulting resource pressure on health services.

These properties also contribute to avoidable greenhouse gas emissions. Increasing the energy efficiency of our domestic rental stock can help:

  • manage the energy costs of tenants, including those of some of the most vulnerable to the cold
  • improve the condition of properties and help reduce maintenance costs
  • lower demand for energy thereby smoothing seasonal peaks in energy demand, and as a result increase our energy security
  • reduce greenhouse gas emissions

Increased demand for energy efficiency measures is also likely to support growth and jobs within the green construction industry and the wider supply chain for energy efficiency.

Greater competition within these markets may also spur innovation, lowering the end costs of installing measures to business and households, and help sustain jobs.

Private sector

The government has committed to upgrade as many private rented sector homes as possible to Energy Performance Certificate (EPC) Band C by 2030, where practical, cost-effective and affordable.

The Domestic Minimum Energy Efficiency Standard (MEES) Regulations means that, subject to certain requirements and exemptions: a) since 1 April 2018, landlords of relevant domestic private rented properties must not grant a tenancy to new or existing tenants if their property has an EPC rating of F or G (as shown on a valid EPC for the property); b) from 1 April 2020, landlords must not continue letting a relevant domestic property which is already let if that property has an EPC rating F or G (as shown on a valid EPC for the property).

Landlords are encouraged to act as soon as possible to ensure that their properties reach EPC E by the deadline of 1 April 2020.

These requirements are referred to in the Regulations and in this guidance as "the prohibition on letting of sub-standard property".

These requirements and proposals will bring significant benefits to landlords, tenants and our environment including:

  • reducing energy bills and increased comfort for tenants and supporting delivery of the statutory fuel poverty target of EPC C by 2030
  • potential property value improvements for landlords
  • delivering carbon emission savings over Carbon Budgets 4 and 5, making progress towards the net zero target

Data shows that in the PRS, the average modelled annual cost of energy for an EPC band G property is £3,105, and £2,124 for an EPC F rated property. This contrasts with an average annual cost of £1,425 for an EPC band E property.

Therefore, a tenant whose home is improved from EPC band F to EPC band E could expect to see their energy costs reduced by £700 a year so long as there were no wider changes in how they use energy in the property.

Around a third of all fuel-poor households in England live in the PRS, despite the sector accounting for only around a fifth of all households in England.

Amongst EPC F and G rated properties in the sector, recent data shows that over 40% of households are classified as fuel poor. Put simply, the PRS has a disproportionate share of the UK's least energy-efficient properties and fuel-poor households. Installation of energy efficiency measures can help address this.

Social housing

In July 2020 the Chancellor announced a £2 billion Green Homes Grant scheme to upgrade homes across England.

Under this, £500 million funding will be allocated to local authorities through the Local Authority Delivery (LAD) scheme, to improve the energy efficiency of homes of low-income households, helping reduce fuel poverty, phasing out high carbon fossil fuel heating, and delivering progress towards the UK's commitment to net zero by 2050.

The LAD scheme aims to raise the energy efficiency of low income and low energy performance homes (those with energy performance certificate (EPC) ratings of E, F or G, although Band D is also in scope in Phase 1B).

In the initial competition (Phase 1A), launched August 2020 with a delivery deadline of March 2021, BEIS allocated £76 million of funding to 57 LA projects. Phase 1B allocated £126m to 81 LA projects in Jan 2021.

Running parallel to the LAD scheme is the Social Housing Decarbonisation Fund, designed purely for the social housing sector.

Table showing estimated retrofit costs
TypeNumberCost to reach EPC CAdditional cost to meet decarbonisationTotal cost (EPC C plus decarbonisation) Total cost (EPC C plus decarbonisation) Average per propertyTotal cost (excluding measures forming part of planned programmes)
New build162/////


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