The Social Housing Decarbonisation Fund (SHDF) supports the UK government’s plans to reach net zero by 2050, by cutting carbon emissions, combatting fuel poverty, and creating green jobs. This fund is mainly aimed at local authorities and housing associations, large residential landlords often with an ageing property portfolio. 

The Social Housing Decarbonisation Fund was launched in August 2021 to improve the energy efficiency of social housing. Approximately four million homes in England are rented through social housing, a figure that represents 16.6 percent of all households, as of December 2022, with total assets valuing £187.1 billion.

The scheme was introduced to help meet the UK government's climate change objectives, tackle fuel poverty, and create green jobs by improving the sustainability of local government and social housing stock across England.

What is the Social Housing Decarbonisation Fund?

Social housing decarbonisation is the process of reducing carbon emissions from social homes as part of the government's plans for net zero. The SHDF subsidises measures, such as insulation and innovation in new technologies like ground source heat pumps, to provide cost-effective energy to social houses and support the transition towards a more sustainable future. 

The fund as five clear objectives: 

• Reduction of fuel poverty, which is where residents struggle to pay rising energy costs due to a poorly insulated property
• Carbon reduction to address the total carbon footprint of homes
• Tenants health and satisfaction from living in more adequate housing
• Green economy support by funding and incentivising adoption of retrofit options
• Retrofit supply chain development 

More than simply meeting a government objective, decarbonisation in social housing can bring many advantages for residents, such as better living standards, decreased fuel poverty, and lower bills.

Why is the Social Housing Decarbonisation Fund important?

Decarbonising social homes is an integral component of the climate transition. As the UK moves closer to its legally binding target of net zero carbon emissions, it's essential that social homes become as energy efficient as possible—and those with lower energy performance properties are retrofitted to reduce greenhouse gas emissions.

A recent UNISON report has highlighted the need for at least 150,000 high-spec social homes to be built or redeveloped per year, with the need for property currently outstripping demand. Approximately 1.1 million people are on social housing waiting lists.

The Social Housing Decarbonisation Fund is a starting point to transform social housing and provide effective living spaces for those most urgently in need, although there’s so much more that local governments and housing associations can do to tackle widespread problems of overcrowding, homelessness, and poor living conditions.

This multi-billion pound scheme is divided into waves—with the first providing £179 million in funding to eligible local authorities and social landlords. It’s thought that the overall project will create roughly 9,000 green energy jobs and reduce approximately 6,000 cars’ worth of annual emissions.

As part of Wave 2, the government has committed a further £800 million through the Social Housing Decarbonisation Fund to local authorities, combined authorities, registered providers of social housing, and arm's-length management organisations (ALMOs).

Who can apply for the Social Housing and Decarbonisation Fund?

Local authorities, combined authorities, registered providers of social housing, and registered charities that own social housing are eligible to apply for the fund.

A £3.8 billion scheme, the Social Housing and Decarbonisation Fund is expected to run over a 10 year period. Allocated funds will enable in-scope social homes to achieve an EPC (energy performance certificate) rating of ‘C’ or above, leading to improved energy efficiency and reduced emissions. It’s estimated that the solutions provided by the SHDF could save tenants up to £170, per year.

Applications are individually assessed on their ability to provide Strategic Fit, Delivery Assurance, and Value for Money. All social housing providers in England can apply for funding—living in social housing is considered eligibility criteria enough—with awarded grants used to support a variety of projects.

While there is no minimum bid size, bids need to include a minimum of 100 social homes at EPC bands D-G. 

Projects that the Social Housing and Decarbonisation Fund can support

The Fund can be used to support a range of projects, from insulating external walls and lofts, water and heating systems, to installing new doors and windows. These measures aim to boost energy efficiency, reduce carbon emissions, and combat fuel poverty.

Furthermore, social housing and decarbonisation funded projects must be delivered with a sustainable and minimal-risk approach towards any potential hazards that may impact residents and the environment. It’s also important to note that any planned installers—those fitting the actual energy efficient measures—must be TrustMark registered and hold relevant PAS2035 compliance certifications to perform the required work involved.

Why housing associations and local authorities need to work together

The government is committed to decarbonising the UK's energy supply, with social housing playing a significant role. 

The Social Housing Decarbonisation Fund's goals include helping social landlords reduce their carbon footprint, combat fuel poverty, and boost the retrofit sector—by making residential property much more environmentally friendly. To achieve this, all parties involved must put forth a concerted effort. This includes housing associations and local authorities working together to get the best results.

For your application, applicants need to quantify the impact of a mix of measures and why those are the most appropriate measures given the properties selected.

First and foremost, this involves identifying social housing projects that need urgent attention and will make a difference to communities. Developing an action plan for improving energy efficiency, including demonstrating how a project meets the SHDF’s desired aims and outcomes, and how the project will achieve value for money are critical aspects of any successful award.

Consideration must also be given to social housing that may prove to be more difficult to retrofit, due to unique features or location in a conservation area. Occasionally, an older property may present special challenges when decarbonising due to existing appliances or features that make the process more challenging, or may simply lack available land for development.

Engaging with residents to deliver retrofit programmes successfully

Ongoing tenant engagement is a key part of successful applications. Resident involvement helps to ensure that projects are delivered on time and on budget. You don’t want residents to refuse entry or object to changes to their property based on poor communication and lack of buy in. 

Whether housing associations, private owners, landlords, or local government property, understanding the current state of social housing stock is hugely important in ensuring safe, secure, and efficient conditions for tenants. Regular collaboration and communication is equally key in identifying potential improvements and needs to maximise living standards and, as a result, future societal opportunities. 

Find out more about the Social Housing and Decarbonisation Fund here.

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