Council response to the DESNZ Warm Homes Fund : Call for Evidence
Responses to the Call for Evidence Questions:
Section 1: Warm Homes Fund Strategic case, aims and scope
Q: Do you agree with our assessment of the strategic opportunities, challenges and risks presented by warm homes financial transactions. Please provide evidence to support your response.
A: We agree with DESNZ’s assessment to reduce consumer energy bills and accelerate decarbonisation, by supporting the building upgrade supply chain with loans and equity investments to bring down costs and scale up the deployment of low carbon technologies.
We agree with all the strategic outcomes. However, it is important to note from a local authority delivery perspective, the dominant barriers to uptake of finance are not just cost, but:
· A lack of trusted local ways for people to access energy efficiency improvements
· Disjointed customer journeys that are hard to navigate
· Challenges in bringing enough demand together to make schemes work at scale in North Yorkshire, many households:
o Live in older, hard to treat homes, often off the gas network
o May not meet standard credit requirements for loan based products
o Are wary of private retrofit offers, shaped by previous experiences with schemes such as ECO
o Include a high proportion of older residents
o Include low income households who are particularly sensitive to increases in household costs
Evidence from delivery programmes shows that uptake is higher when:
· Schemes are led by the local authority, giving residents confidence and trust
· Advice, procurement, installation and aftercare are joined up, rather than delivered separately
We strongly support place based, aggregated finance models rather than approaches that rely on individual, consumer led lending. Our experience of supporting local council energy advisers, including home visits, shows that less technical, relationship based aftercare is especially important for vulnerable residents. Providing reassurance, talking through next steps and being available after installation can make the difference between works going ahead or stalling, particularly for residents who are anxious about disruption, costs or new technologies.
Q: What evidence is there on the factors that most significantly limit the uptake of green finance?
Residents can be wary of retrofit offers and influenced by negative news stories regarding schemes such as ECO. Similarly, residents may live in harder to treat homes, may not meet the credit requirements or include low income households who are sensitive to increases in household costs.
Evidence from delivery programmes shows that uptake is higher when:
· Schemes are led by the local authority, giving residents confidence and trust
· Advice, procurement, installation and aftercare are joined up, rather than delivered separately
We strongly support place based, aggregated finance models rather than approaches that rely on individual, consumer led lending.
Relationship based aftercare is especially important for vulnerable residents. Providing reassurance, talking through next steps and being available after installation can make the difference between works going ahead or stalling, particularly for residents who are anxious about disruption, costs or new technologies.
Q: What wider loan or equity-based interventions in the warm homes market could unlock demand at scale?
Our experience of delivering energy efficiency schemes is that there is often a perceived “able to pay” market that, in reality, is neither able nor willing to pay upfront. Even where households are not classed as low income, the initial cost of measures is a significant barrier.
Demand could be unlocked by:
· Spreading costs over the full lifetime of the product, aligned with warranties, using 0% or very low interest loans, combined with partial grant funding.
· Packaging finance alongside delivery to reduce concerns about technical performance and reliability, which often arise due to a lack of knowledge or confidence in newer technologies.
· Creating offers where residents can clearly see that monthly bill savings help offset repayments, making the overall proposition more affordable and easier to understand.
Concerns are also frequently raised around “rental” or lease style products, particularly around the risks for homeowners if they decide to sell their property in the future. Uncertainty about how these arrangements affect property sales, mortgages or valuations creates an additional barrier to uptake. These issues need to be clearly addressed within any financing offer if such models are to form part of a credible solution.
At present, most self financed retrofit options have long payback periods, which discourages uptake. A more attractive offer would allow residents to see earlier benefits through lower bills, improved comfort and reassurance around quality and aftercare, rather than relying solely on long term payback.
Q: How should the Warm Homes Fund ensure that it includes an offer suitable for those on low incomes? Any information on specific models is encouraged.
A: Loan based finance will not work in isolation for fuel poor households. More effective models could include:
· Local authority led, area based schemes that combine grant funding with repayable finance at a programme level, rather than at individual household level.
· Finance directed to landlords and social housing providers, where bill savings flow directly to tenants. Any such approach should include appropriate controls on rent increases to ensure tenants benefit from the investment.
· Third party ownership or service based models where repayment obligations are not borne directly by the household.
Any allocation aimed at low income households should:
· Avoid adding additional household debt.
· Make use of local authority eligibility criteria, data and intelligence to ensure funding is well targeted.
· Prioritise reduction in energy bills, health outcomes and thermal comfort over asset ownership.
This aligns with DESNZ’s recognition of the limitations of household level loan finance for lower income and financially vulnerable households. In areas with a high proportion of private rented sector properties and pockets of significant deprivation, it is essential that the Warm Homes Fund includes an attractive and well designed offer for landlords. Feedback from our recent landlord forums has demonstrated a clear willingness within the sector to improve energy efficiency across rental homes. However, there remains a strong focus on simply achieving EPC compliance, rather than fully understanding and realising the wider benefits of improved energy efficiency for both the property and residents.
A clear, accessible landlord offer, tailored to supporting compliance with Minimum Energy Efficiency Standards (MEES) and linked to the most appropriate energy performance measures, would help shift this focus from minimum compliance to long term improvement.
Finally, programmes and funding should be delivered directly through local authorities, without introducing additional layers of bureaucracy. Schemes should be straightforward to administer, supported over the long term, and designed to build momentum and confidence. A stop start approach undermines delivery, supply chain stability and landlord and household engagement, and should be avoided.
Q: Do you agree with the proposed overarching aims of the Warm Homes Fund? Please provide evidence to support your answer.
We agree with the proposed aims of the Warm Homes Fund. From a local authority perspective, reducing energy bills is central to tackling fuel poverty, improving health outcomes and supporting MEES delivery. Warmer, more energy efficient homes lead to better health, particularly for older and vulnerable residents, and reduce pressure on health and care services. The Fund should support clear, affordable finance offers—particularly in the private rented sector—delivered through trusted, local authority led, place based schemes, and recognise that loan based finance alone will not work for all households.
Q: Do you agree with the proposed technology scope and are there any technologies
missing that you think the Fund should focus on? Please provide evidence to support your response.
We agree with the proposed technology scope, which appropriately focuses on proven low carbon technologies and energy efficiency measures that can deliver bill reductions at scale.
It is important that energy efficiency measures, supporting works such as ventilation, and network upgrades remain fully in scope to enable effective whole house solutions and avoid unintended impacts. In addition, the Fund should recognise the enabling infrastructure required to make these technologies work effectively. This includes access to reliable broadband or Wi Fi connectivity, which is essential for monitoring, optimisation and smart controls. Connectivity also enables remote support, allowing family members or carers to help residents—particularly older or more vulnerable households—operate new technologies with confidence. This is a particular challenge in our rural communities of North Yorkshire, where connectivity remains inconsistent. While some areas will benefit from government led fibre to the home roll out, others continue to experience poor coverage. Without addressing this issue, there is a risk that installed technologies are under used or create anxiety, limiting the benefits of investment.
Q: What is the extent to which the Warm Homes Fund could support additional
measures in new build social and affordable housing? Please describe how the resulting benefits could be realised from Warm Homes Fund investment.
This approach would be particularly beneficial in areas with higher levels of deprivation, where residents may otherwise face unaffordable energy costs even in new homes. Warm Homes Fund investment, if carefully targeted and blended with existing grant programmes, could therefore deliver early, long lasting benefits for tenants while supporting the Fund’s wider aims of bill reduction and decarbonisation.
Q: Do you agree with the proposed list of activities the Warm Homes Fund could
support and are there any other types of activities that should be supported?
A: We support this approach and recommend that enabling digital infrastructure, such as reliable broadband or Wi Fi, is also included where needed to support smart technologies, meaningful data collection and remote support for residents, particularly in rural and vulnerable households.
Q: What barriers in the current finance landscape prevent non-domestic and mixed-use buildings from investing in low carbon technologies?
Return on investment without some form of subsidy is not a given. The York and North Yorkshire decarbonisation grants programmes (for businesses and community buildings) have been very successful providing up to 60% of funding for non-domestic buildings including insulation and energy efficiency / generation programmes. Without this support it is unlikely that those organisations would be able to invest.
It is likely that older buildings are more expensive to adapt although there are some examples of innovation such as Peacock and Verity – Masham.
Q: Do you agree with the proposed list of groups that the Warm Homes Fund may
support and are there any other groups which should be supported?
When considering investment in larger or high energy using buildings, this should not be done in isolation from the domestic housing stock around them. Investment in energy intensive public or community buildings can and should be designed to enable wider benefits for nearby homes, for example through shared infrastructure, heat networks, local generation or flexibility solutions. Taking an area based approach helps ensure that dwellings—particularly those occupied by low income or vulnerable residents—are also able to benefit from the investment, rather than large assets being upgraded in isolation.
Section 2: Investing across the supply chain
Q: How do you think the Warm Homes Fund could best support owner-occupiers to
invest in home upgrades?
A key role of the Warm Homes Fund should be fuel poverty prevention, not just remediation. Supporting owner occupiers to upgrade their homes before they fall into fuel poverty will reduce long term demand for crisis support. Affordable, blended finance offers that prioritise insulation, heating efficiency and bill reduction can help households remain financially resilient, particularly in the face of rising energy costs. Early intervention through trusted, local authority led delivery—supported by advice and aftercare—can prevent households from slipping into fuel poverty while also improving comfort and health outcomes.
Q: How are financial institutions currently using EPCs to inform their financial
products, and are there any other implications of the use of EPCs for financial products that we should consider?
There are wider implications that should be considered. A strong focus on headline EPC scores can encourage a narrow, compliance driven approach, rather than promoting the measures that deliver the greatest bill savings, comfort and health outcomes. For many households, particularly those in fuel poverty or living in hard to treat homes, improving EPC ratings alone does not always reflect real world affordability or performance.
Q: How could the loans scheme be designed to encourage new products or entrants
into the market?
A: Supporting place based, aggregated delivery models, where demand is bundled through local authorities or trusted partners, reducing marketing and transaction costs for new providers. This would increase consumer trust in the schemes and enable integration with local authority advice and support, rather than separating finance from delivery.
Q: Would Property Linked Finance (PLF) support the draft Warm Homes Fund aims,
when could benefits be realised, and what risks need to be considered? Please give evidence to support your answer.
A: Given that no single mechanism will suit all households, property linked finance options should form part of a wider, flexible offer that provides a range of funding choices. Access to high quality, impartial advice will be essential to support informed decision making, and this may be best delivered by suitably trained local authority officers to ensure consistency and minimise bias. Any such model would also need to consider the expected lifespan of installed measures, to avoid situations where remaining charges outlast the useful value of the assets and risk becoming a barrier rather than a benefit at the point of sale.
Q: Is there a need for finance here, and what are the barriers that prevent the private
sector from filling it?
A: There is a need for finance to support domestic retrofit, as many low to middle income households do not view such upgrades as essential and are unable to meet high upfront costs, resulting in low demand and take up. The private sector has not filled this gap due to long payback periods, relatively modest bill savings, and uncertainty over consumer demand and resale impacts, which limit the commercial attractiveness of retrofit lending products.
Section 2B: Landlords and tenants
Q: What barriers and opportunities do private landlords encounter when accessing
loans or investing in warm homes upgrades for their properties and how could the Warm Homes Fund help them overcome these barriers?
A: Access to impartial local authority advice would help landlords make informed decisions and encourage take up, while aligning support with emerging regulatory requirements could further drive engagement. Providing complementary support to tenants on the effective use of installed measures would also be important in maximising benefits and ensuring anticipated energy and cost savings are realised.
Q: What are the barriers that affect the ability for social housing providers to invest in
warm homes upgrades? And how could the Warm Homes Fund support?
A: To support local authorities to invest in warm home upgrades, it is important for grant certainty and the removal of annual bidding to a more certain profile of funding over the longer term, and 2. Some of the grant rules are meaning properties must stay vacant for longer than necessary to ensure PAS sign off. This needs to be rectified to enable the property to be occupied as soon as possible and minimise financial cost to the local authority.
To enable social housing providers to invest further in decarbonisation would be the ability to include comfort/energy within a holistic rent calculation package. A barrier to investment is that there is not a return on investment for the Housing Revenue Account because the tenant saves money. If investment could be recovered over a longer period then it would unlock the ability for social housing providers to fund these measures. This could be a service charge on top of rent but in exchange for a fixed amount of energy. The ability for this to happen at scale would be welcomed.
Q: What risks or unintended impacts should government consider if using public
finance to incentivise above-minimum warm homes standards in new-build social and
affordable housing?
A: Social housing providers face significant competing demands on very limited capital and revenue budgets, i.e. compliance, decent homes standards, stock condition survey backlogs, and responses to damp and mould, so retrofit and energy efficiency upgrades struggle to complete with this priority investment, where the financial return is long term and not captured directly by the landlord.
Capacity, skills, and delivery constraints. Many providers, particularly ALMOs and smaller housing associations, face limited internal capacity to design, procure, and manage large scale retrofit programmes. The wider market also continues to experience shortages of suitably skilled retrofit coordinators, assessors, and contractors.
Type of the existing housing stock is a potential barrier.
A significant proportion of social housing consists of older, non standard, or hard to treat properties (solid wall construction, off gas homes, rural locations). These homes are more expensive and complex to upgrade, often requiring bespoke solutions and higher upfront costs
Tenant engagement and resident impacts could be seen as a barrier. Delivering warm homes upgrades requires meaningful tenant engagement and can involve disruption, decanting, or behavioural change. Providers are often cautious about progressing schemes where residents are anxious about disruption, costs, or changes to their home environment.
Inflexible funding rules and delivery timescales play a large barrier that affects the ability for social housing providers to invest in warm homes upgrades. Previous funding programmes have often had tight delivery deadlines, narrow eligibility criteria, and limited flexibility to respond to on the ground realities (e.g. procurement delays, supply chain disruption, resident refusal).
How the Warm Homes Fund could support this:-
· Grant certainty – removal of annual bidding to a more certain profile of funding over the longer term, (e.g. multi year programmes) to support strategic planning rather than short term bidding.
· Some of the grant rules are meaning properties must stay vacant for longer than necessary to ensure PAS sign off. This is perverse and needs correcting in any future iterations.
· Provide long term, predictable funding settlements (e.g. multi year programmes) to support strategic planning rather than short term bidding
· Allow flexibility to blend grant funding with provider borrowing and existing capital programmes Recognise and support whole stock approaches, rather than piecemeal, property by property upgrades
· Apply higher grant rates or flexible cost caps for hard to treat and rural properties
· Enable area based or archetype based approaches, particularly in estates with similar construction types
· Support innovative or hybrid solutions where full decarbonisation is not immediately achievable
· Fund resident engagement, communication, and support activities as core programme costs
· Support in home advice and aftercare, helping residents to use new systems effectively
· Encourage outcomes focused on affordability, comfort, and health, not just technical energy metrics
· Introduce flexible delivery windows with realistic milestones
· Allow sensible project variations without punitive clawback
· Encourage a learning and improvement approach, rather than overly rigid compliance
Section 2E: Manufacturing, supply chain, and skills
Q: How could bulk purchasing support the draft Warm Homes Fund aims, when
could benefits be realised, and what risks need to be considered? Please give evidence to support your answer.
A: 98.4% of businesses in North Yorkshire are micro/small. This is only slightly higher than the national average. Bulk purchasing from single suppliers risks undermining the potential for small innovators to develop inroads into these markets.
An alternative approach might be to consider procurement processes – frameworks for example.
Q: Is there a need for finance here, and what are the barriers that prevent the private
sector from filling it?
A: Potentially – where significant up front investment is required. Private sector may not have the capacity in every case.
Q: How could government finance address this gap with repayable finance where
government earns a return? Where possible, please describe how this model could work
A: Local authorities could provide finance to pre-pay for goods and services and recover costs once work is complete. LAs could potentially manage this in a similar way to grant giving or voucher systems.
Q: What are the wider policy barriers that may need to be overcome to realise the
benefits of bulk purchasing? Please consider any specific areas of law, regulation or other policy which may need to change.
A: Consideration should be given to the local procurement process. Also the provision of short term loans or support may be difficult to administer and could be replaced with a voucher scheme.
Q: How could equity investment support the draft Warm Homes Fund aims, when
could benefits be realised, and what risks need to be considered? Please give evidence to support your answer.
A: Government invests in specific companies and start ups – housing / construction companies and retrofit companies in order to de-risk innovation and support upscaling with a stake in companies anticipated to grow as these markets mature. There is a risk of losses which could be mitigated by supporting a wide range of companies and organisations. Return on investment could be used to reinvest in similar programmes. There would likely be 3-5 years to see returns however depending on the speed at which the markets develop.
Q: Is there a need for finance here, and what are the barriers that prevent the private
sector from filling it?
A: ROI is difficult to achieve as a result of the cost of energy and investment would need to be front loaded. It’s not clear that private equity would take the risk.
Q: How could government finance address this gap with equity where government earns a return? Where possible, please describe how this model could work.
A: Government should consider using local authorities to purchase equity in small businesses developing products and services in retrofit, green energy generation on the basis that some of these businesses may grow significantly and provide a return on investment which could be reinvested in carbon reduction programmes. Such investment would help to de-risk innovation and investment.
Q: How could loans for skills and training support the draft Warm Homes Fund aims,
when could benefits be realised, and what risks need to be considered? Please give evidence to support your answer.
A: Direct investment in skills providers and include a voucher scheme for businesses and individuals.
Q: Is there a need for finance here, and what are the barriers that prevent the private
sector from filling it?
A: There could be support through existing measures including CA skills funding.
Q: What are the wider policy barriers that may need to be overcome to realise the
benefits of skills loans? Please consider any specific areas of law, regulation or other policy which may need to change
A: There may be some subsidy control issues. Skills loans could take the form of vouchers for training.
Section 2F Heat Networks
Q: What are the wider policy barriers that may need to be overcome to realise the
benefits from the outlined investments into heat networks? Please consider any specific areas of law, regulation or other policy which may need to change.
A: Its not that there are barriers to heat networks in the planning system, as this is about how buildings are heated. The initial heat generation project is going to need planning consent but then- its more just around understanding what needs planning permission and what can be undertaken under PD rights (perhaps as a statutory undertaker -which gives certain rights) (please note that flats don’t have PD rights like dwellings do either).
Principles in law are that a heat network would need to take into account and comply with (in planning terms):
· The impact on listed buildings and conservation areas (and Scheduled Monuments too) but the latter needs consent from the DCMS
· The development plan, and any material considerations, which would be the currently in draft NPPF and its weight will increase.
· Protected landscapes and the duty to seek to further their purpose of protecting and enhancing natural beauty.
Proposals are considered on a case-by case basis applying planning judgement ‘the planning balance’.
Section 2G: Community Energy and Buildings
Q: How would investments in community energy projects (including generation and flexibility) or community buildings support the draft Warm Homes Fund aims, when could benefits be realised, and what risks need to be considered? Please give evidence to support your answer.
A: Many community organisations own and manage both commercial and domestic type properties, often with one subsidising the other. Enabling community energy projects (energy efficiency and renewable energy generation) that cross the boundary between domestic and commercial would enable continued investment and resilience of community owned assets.
One potential risk is that landlords (private or community based) may seek to increase rental charges if properties and considered less expensive to heat and power. This should be prevented in any grant or loan conditions.
Q: Is there a need for finance in community energy, and what are the barriers that
prevent the private sector from filling it? Please also specifically consider how government financing can support building upgrades in the community sector.
A: Financial support will be required to support community energy projects. These groups and organisations tend to be newly formed and do not have access to assets or track record of developments.
Q: What are the wider policy barriers that may need to be overcome to realise the benefits of community energy? Please consider any specific areas of law, regulation or other policy which may need to change.
A: Grid capacity in rural areas tends to be poor and not able to support low carbon upgrades at scale, such as installation of heat pumps. Rural communities may also be on traditional oil-fired boilers which require significant individual capital retrofit outlay to switch to heat pumps or wholescale community transition to make heat networks viable. The risk to the individual needs to be removed.