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Baker Homes Blog

New £5bn ‘green energy bond’ to kickstart retrofit

Posted by John Stapleton on 02-Mar-2015 24:27:00

Most people agree that getting the UK’s housing up to scratch is a daunting prospect – retrofitting every home in the UK to 95% less carbon is a massive job that has barely begun. In fact, at current rates of progress we need to refurbish over 13,000 a week to meet our carbon targets.

Even if we make big savings by employing the latest systems, such as the innovative Energiesprong that a consortium of housing associations are planning to pilot in the UK, we are talking big money. One estimate puts the cost of getting up to ‘C’ at £28 billion for social housing alone. This can sometimes stymie the conversation before it has even started. How, so the argument goes, can we even think about this stuff when there is a housing crisis and no money in the bank?

But even if we disregard the positives of retrofit – improved health, well-being and property values to take just three – the trends are clear. In ten years retail gas prices have risen in by 248% in real terms. 8 million people will be living in fuel poverty by 2030. Homes that waste energy and are expensive to run are part of the housing crisis: the question is reversed: how can we afford not to?

So how to pay for it. Should we wait for government to come up with the cash? Probably wise counsel not to rely on any largesse in these straightened times. One consideration is having residents contribute through savings on bills that investment brings. Others have been partnering with the NHS – with happier, healthier people meaning fewer costly hospital visits.

Another option is to seek finance. Just before Christmas, Baker Homes held a breakfast seminar on a new financing method which will be launched in the summer – a ‘green energy bond’. Aimed at both local authorities and housing associations, the bond aims to raise a total of £5billion, £500m at a time, to finance the retrofitting of 25,000 homes and the building of 10,000 new green homes – all at a high standard.

The bond will use the strong credit ratings of local authorities and higher rated housing associations to ensure competitive rates, and will last for around thirty years, with around £24,500 spent on upgrading each home. Crucially, the work will be undertaken by existing DLOs, so avoiding the time and expense of having to procure new contractors.

A green energy bond is one more option that local authorities and housing associations can use – and serves to highlight how important the mechanism by which retrofit happens. Large-scale, street-by-street is the ticket. Once this is in place, this new bond could be but one source of finance – used collaboratively, across the sector, to make things happen. Watch this space.

To find out more please contact us on 0875 221 2232 or info@bakerstimber.co.uk

 

Topics: Registered Social Landlords, Retrofit, Funding, Direct Labour Organisations (DLO)

On 10th June, we welcome you to our national conference 'Making the business case for retrofit' Hear from registered landlords on their success, new financing options for major works and the new government's prospects. For more information and to register click here.



Baker Homes, Making the business case for retrofit, social landlords, financing retrofit, retrofit policy

 

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