Warm Homes Fund: Call for Evidence NHDG response

National Home Decarbonisation Group
Warm Homes Fund: Call for Evidence

Deadline for submission: 1st June 2026

Response submitted by: National Home Decarbonisation Group

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About the National Home Decarbonisation Group

The National Home Decarbonisation Group (NHDG) is for Tier 1 retrofit contractors and energy suppliers delivering large-scale, high-quality home decarbonisation installations in a PAS compliant manner to all tenures of UK housing, directly for the client. NHDG members are involved in large-scale social housing frameworks for energy efficiency measures installation and are closely involved in delivering schemes under the Warm Homes Fund and other projects funded directly by local authorities and housing providers in the UK.

Section 1: Warm Homes Fund Strategic Case, Aims and Scope

Strategic Case

Question 1: 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.

The NHDG broadly agrees with the Government’s assessment of the strategic landscape and welcomes the recognition that public grant funding alone cannot deliver retrofit at the scale required. The international precedent is encouraging: the KfW model in Germany demonstrates that a state-backed lending institution with strong credit can source low-cost capital from private markets and distribute it through commercial banks at affordable rates to consumers, achieving scale without indefinite reliance on grant subsidies.1

One of the clearest opportunities is the potential to use public funding to unlock significantly greater levels of private investment into the retrofit market. According to the Climate Change Committee, retrofitting all of the UK’s housing stock will cost an estimated £250 billion by 2050.2 As such, the scale of investment required for residential retrofit far exceeds what can realistically be delivered through grant funding alone.

However, the consultation’s account of why demand for green finance products remains low focuses primarily on consumer awareness, payback periods, and interest rates. NHDG members’ experience of delivering retrofit at scale indicates another deep structural barrier – the breakdown of trust in the retrofit market following inconsistent and, in some cases, poor delivery under previous installer-led schemes, most notably ECO.

Confidence in the quality of work being carried out is key to persuading both residents and institutional investors to participate in the retrofit finance market. Robust quality standards and guarantees have been identified by mortgage lenders and institutional investors alike as a prerequisite for entering the energy efficiency market. Lenders need confidence that installations will be completed to a good standard in order to protect their own brand and reputation3. Therefore, delivery quality and accountability must be central to design of the WHF.

The consultation rightly acknowledges that the speed of deployment may favour established institutional structures and experienced operators. NHDG strongly endorses this principle. Tier 1 PAS-compliant retrofit contractors — organisations with established supply chains, quality management systems, retrofit coordinator capacity, and accountability frameworks — are the delivery infrastructure on which credible green finance products must be built. Schemes anchored in these reputable contractors provide the assurance that finance providers require and the quality outcomes that generate genuine consumer confidence and measurable bill savings. Fragmented, installer-led models do not.

The NHDG also agrees with the observation in the call for evidence that policy fragmentation and short-term funding cycles continue to undermine investor confidence. The current retrofit landscape remains highly complex, with multiple schemes operating simultaneously under different eligibility criteria, funding rules and delivery mechanisms. Frequent policy changes and short-term funding settlements create uncertainty for consumers, installers and investors alike, contributing to a “boom and bust” delivery cycle which discourages long-term investment in skills, supply chains and finance products.

The potential for a future cross-tenure Warm Homes “mega-scheme” is therefore a particularly welcome development. Bringing together the Warm Homes: Social Housing Fund and Warm Homes: Local Grant into a coherent long-term framework has the potential to simplify the customer journey, create stronger market confidence and provide a more stable platform around which private finance products can develop. In particular, the NHDG believes there is a major opportunity to build an ecosystem of green finance products around this framework. Green finance can help to expand retrofit deliver to those households who currently sit outside fully grant-funded support, while also helping social housing providers to fund their own contributions to capital grant schemes.

References:

Rosenow, J. and Galvin, R. 2013. Evaluating the evaluations: Evidence from energy efficiency programmes in Germany and the UK. Energy and Buildings, 62, pp. 450–458. Available here.
Business, Energy and Industrial Strategy Committee. 2022. Decarbonising heat in homes. Available here.
Green Finance Institute. 2024. Unsecured Green Home Loans: Managing the Risk. Available here.

Question 2: What evidence is there on the factors that most significantly limit the uptake of green finance?

Delivery Quality and Trust in the Market

A key barrier to green finance uptake is the erosion of consumer and investor trust following inconsistent delivery under previous retrofit schemes. NHDG members report that households with direct or indirect experience of poor-quality installations are often reluctant to engage with retrofit projects regardless of how the financing arrangements are structured. Even on capital grant programmes where residents do not need to make any financial contribution, many are reluctant about having retrofit measures installed in their homes. This issue also affects finance providers. Without confidence in installation quality, consumer protection and long-term performance, lenders and institutional investors are less willing to support retrofit finance products. Installation quality, accountability and trusted delivery frameworks are therefore essential prerequisites for attracting private investment into retrofit markets.³

Affordability and the Cost of Borrowing

Even where finance products are available, the cost of borrowing remains a major deterrent for many households. Interest rates are the single most important consideration for able-to-pay households when assessing retrofit finance products, with government-backed finance significantly outperforming commercial offers in consumer testing.⁴ The failure of the Green Deal demonstrates the importance of this issue. High interest rates undermined uptake despite wider policy support.⁵ NHDG members consistently report that households are unlikely to engage with retrofit finance unless products are simple, low-interest and clearly linked to tangible consumer benefits.

This challenge is compounded by the continued electricity-to-gas price imbalance. Many consumers remain concerned that low-carbon heating systems could result in higher running costs,⁶ limiting willingness to finance technologies such as heat pumps despite their efficiency benefits. This also makes financial products where returns are linked to energy savings less viable than they would otherwise be with a more favourable electricity-to-gas price ratio.

Upfront Cost Perception and Consumer Awareness

Perceived upfront cost remains a major psychological barrier, even where finance products reduce the immediate capital requirement. Many households do not fully understand the financing options available to them or lack confidence in projected bill savings and payback periods. NHDG members consistently observe that fragmented customer journeys, complex finance offers and poor communication reduce consumer confidence and delay decision-making. Clearer communication of expected costs, savings and financing pathways is essential to converting consumer interest into actual uptake. Research highlights the importance of trusted advice services and “one-stop shop” models in improving engagement and consumer confidence.⁷

Policy Fragmentation and Lack of Long-Term Certainty

Frequent policy changes, short-term funding cycles and fragmented schemes continue to undermine market confidence. NHDG members highlighted that the current retrofit landscape remains highly complex, with different schemes operating under varying eligibility criteria, delivery models and funding mechanisms. Research has found that this fragmentation contributes to a “boom and bust” cycle which discourages long-term investment from both the supply chain and finance providers.⁸ The proposed Warm Homes cross-tenure “mega-scheme” is therefore a welcome development for NHDG members. A more coherent, long-term framework could simplify the customer journey, improve investor confidence and provide a more stable platform around which green finance products can develop.

References:

Green Finance Institute. 2024. Unsecured Green Home Loans: Managing the Risk. Available here.
Nesta. 2023. All the things I could do: financing green home upgrades. Available here.
Rosenow, J. and Eyre, N. 2016. A post mortem of the Green Deal: Austerity, energy efficiency, and failure in British energy policy. Energy Research & Social Science, 21, pp. 141–144. Available here.
Energy UK. 2025. Clean Heat: Balancing the bill. Available here.
Which? 2023. Empowering homeowners to insulate their homes through improved awareness and information. Available here.
House of Commons Environmental Audit Committee. 2025. Retrofitting homes for net zero. HC 135. Available here.

Question 3: What wider loan or equity-based interventions in the warm homes market could unlock demand at scale?

NHDG members find that the interventions most likely to unlock retrofit demand at a major scale are those that move away from individual consumer transactions and towards aggregated, place-based delivery models anchored in local authority leadership. While individual consumer finance products have a role to play, they are unlikely to deliver the volume, certainty or coordination required to transform the UK’s housing stock across all tenures.

Area-Based Delivery as the Primary Vehicle for Institutional Finance

Pension funds and other institutional investors require long-term, low-risk, predictable returns on a sufficient volume of assets.⁹ Area-based retrofit schemes, designed and led by local or strategic authorities, covering all tenures within a defined geography, and structured to provide no upfront cost to the household with long-term repayment secured against the asset, are the model that most credibly meets these requirements. NHDG members’ experience of delivering at programme scale confirms that fragmented, household-by-household transactions cannot generate the pipeline consistency or risk profile that institutional investors need. Area-based schemes can aggregate demand, standardise delivery, and provide long-term security for both finance providers and households.

Aggregated and Portfolio-Level Financing

Where individual consumer loan products are deployed, aggregation at portfolio level is essential to reduce transaction costs and create an asset class capable of attracting secondary market investment. Standardised loan products with consistent underwriting criteria, quality assurance requirements, and monitoring frameworks would allow portfolios of retrofit loans to be packaged and offered to institutional investors. This requires a robust delivery quality assurance framework as a prerequisite. A portfolio of loans secured against poorly installed or underperforming measures is not an investable asset.

Local Authority Leadership and Cross-Sector Collaboration

Area-based programmes deliver most effectively when local authorities act as system integrators. NHDG members report that the most effective programmes are those designed in collaboration with local supply chain partners, housing providers, and other public sector bodies including NHS trusts. Cross-departmental financing models that bring together health, housing, and energy budgets around area-based programmes would strengthen the investment case and extend the reach of WHF financing to households that a purely financial return model cannot serve.

Pay-As-You-Save and Energy-as-a-Service Models

Pay-as-you-save, rent-a-roof and energy-as-a-service models may have a useful role in specific parts of the market, particularly for measures such as solar PV and battery storage where savings or revenue streams are more clearly attributable. These models may help reduce upfront costs for households and support adoption where consumer protections are strong. However, the NHDG does not believe these models alone will deliver the wholesale transformation required. They are unlikely to address the full range of measures needed across the housing stock, particularly more complex fabric upgrades, mixed-tenure schemes and hard-to-treat homes. They should therefore be seen as part of a wider financing ecosystem rather than the primary route to scale.

References:

Green Finance Institute. 2024. Financing energy efficient buildings: the path to retrofit at scale. Available here.

Question 4: 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.

Low-income households present a distinct challenge for any finance-based approach to retrofit. For this group, unsecured loans are not appropriate: many cannot take on additional debt, may already carry energy debt, and are unlikely to have sufficient disposable income to service loan repayments even at zero interest. The starting point for the Warm Homes Fund’s low-income offer must therefore be grant funding, with finance playing a complementary rather than primary role.

Grants Should Remain the Foundation for Low-Income Households

The most effective existing mechanism for reaching private low-income households is the Warm Homes Local Grant. NHDG members are delivering under this scheme and report strong momentum. To sustain support for low-income households, the WH:LG should be extended and its cost caps increased, particularly for expensive fabric measures such as solid wall insulation where current caps are insufficient to cover the full cost of compliant, high-quality installation. Local authorities are well placed to oversee delivery and ensure that homes are upgraded to the correct standard.

Innovative Finance Models for Low-Income Households

Where finance does have a role for low-income households, the key design principle is that repayment must be structured so that it does not create an additional financial burden. The most promising models are those that link repayment to energy bill savings, so that the household’s net financial position improves from the point of installation rather than deteriorating while the loan is repaid. Subscription-based arrangements covering capital cost, ongoing energy costs, and repair and maintenance within a single monthly payment offer a potential template, provided the payment is set below the household’s pre-installation energy costs.

Energy-as-a-service models may also have a role where they provide households with a simple monthly payment covering equipment, maintenance and energy use. However, these models must include strong consumer protections, transparent pricing, and safeguards to ensure low-income households receive genuine bill savings. Social housing providers may also be well placed to act as aggregators for flexibility services, generating revenue streams from demand-side response and grid services that could contribute to offsetting the cost of retrofit for their tenants.

Blended Finance and Eligibility Gaps

A persistent problem in the current landscape is that some households fall between grant and loan eligibility thresholds: their income is too high to qualify for fully funded grant support but too low to service a loan product at commercially viable rates. The Warm Homes Fund should adopt flexible eligibility criteria and blended finance structures that can serve this group, combining partial grant support with concessional loan terms.

Potential Aims, Scope and Eligibility

Question 5: Do you agree with the proposed overarching aims of the Warm Homes Fund? Please provide evidence to support your answer.

The NHDG broadly agrees with the proposed overarching aims of the Warm Homes Fund. Reducing household energy bills, accelerating decarbonisation, supporting the retrofit supply chain and scaling the deployment of low-carbon technologies are the right objectives for the Fund. However, the Fund’s aims should be framed around outcomes, not only technologies. Success should not be measured simply by the number of solar panels, batteries, heat pumps or other measures installed, but by whether homes become warmer, cheaper to run, healthier, lower carbon and better prepared for electrification.

The NHDG would therefore encourage Government to ensure that the Fund supports a whole-house approach to retrofit. Low-carbon technologies will be essential, but they must be deployed alongside appropriate energy efficiency, fabric and enabling measures where these are needed to reduce demand and protect consumers from higher running costs. Electrifying a poorly insulated home does not reliably reduce energy bills.¹⁰ It changes the source of energy consumption without addressing its scale. For the Fund’s bill reduction aim to be credible, insulation and fabric measures must be treated as a prerequisite for low carbon heating deployment, not as an unrelated strand of activity.

NHDG members delivering whole-house retrofit programmes find that high quality insulation is essential to ensuring that heat pump installations perform efficiently and deliver intended bill savings. This is particularly important for harder-to-treat homes and low-income households, where poorly sequenced upgrades could undermine affordability and resident confidence.¹¹ It is critical that the WHF does not inadvertently push households into fuel poverty; the best way to avoid this is through a whole-house approach to retrofit.

The NHDG also believes the aims should recognise the importance of consumer protection and measured outcomes. Given recent quality issues in parts of the retrofit market, finance providers and households will need confidence that funded works are delivered to a high standard and that performance can be verified. Embedding quality assurance and in-use performance monitoring within the Fund’s design would help strengthen trust and support long-term market growth.

References:

International Energy Agency. 2024. Energy Efficiency 2024: Does a heat pump work in a house with poor insulation? Paris: IEA. Available here.
E3G. 2024. Safe Passage: Delivering a fair and sequenced heat transition for low-income and hard-to-treat homes. London: E3G. Available here.

Question 6: 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.

The NHDG broadly agrees with the proposed technology scope. However, the Fund should avoid being overly prescriptive. The retrofit market is developing quickly, and a tightly defined technology list could unintentionally exclude future innovations that may improve affordability, consumer outcomes, grid readiness or delivery efficiency. The technology scope should therefore remain flexible and be reviewed regularly, with a clear route for emerging technologies to be included where they can demonstrate strong performance, value for money and consumer benefit.

Monitoring, Measurement, and Performance Verification

The proposed technology scope does not include monitoring and measurement tools. This is a significant gap. Without smart meters, SMETERs, and equivalent performance verification devices, there is no reliable means of demonstrating that installed measures have performed as intended. NHDG members report that the absence of robust outcome measurement has been a recurring weakness of previous retrofit schemes, contributing to the erosion of consumer and investor confidence that now represents one of the most significant barriers to green finance uptake.

Metered performance data serves multiple purposes within the Warm Homes Fund framework. It provides consumers with transparent evidence of bill savings, which builds confidence and supports demand. It provides finance providers and investors with verified asset performance data, which is a prerequisite for underwriting retrofit loan portfolios and attracting institutional capital. And it provides government with the evidence base needed to assess scheme effectiveness and refine policy over time.

The Fund risks repeating the mistakes of previous schemes if it continues to reward installation without any mechanism for verifying outcomes. The NHDG recommends that monitoring and measurement technology be included within the scope of the Warm Homes Fund as an eligible measure, and that performance verification be built into scheme design as a standard requirement rather than an optional addition.

Question 7: 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.

NHDG’s position is that Warm Homes Fund investment should be prioritised for the retrofit of existing housing stock rather than directed towards new build social and affordable housing. While NHDG recognises that new build affordable housing can still fall short of optimal energy performance standards, the scale and urgency of need in the existing stock is of a different order entirely.

There are approximately 29 million homes in England, the vast majority of which will require some form of retrofit intervention to meet the Government’s decarbonisation targets. The total financing requirement for retrofit across Greater Manchester alone is in the region of £20 billion, with 2.2 million individual measures required across the city-region’s housing stock.¹² Scaled nationally, the investment requirement is of a magnitude that existing public funding streams cannot meet without substantial private and institutional capital mobilisation.

In this context, diverting Warm Homes Fund funding towards new build — where building regulations already set minimum energy performance requirements and where developers have primary responsibility for compliance — would reduce the Fund’s impact on the households who need it most. NHDG recommends that the Government retain a clear boundary between the Warm Homes Fund, which should focus on the existing stock, and other mechanisms such as Homes England funding and planning obligations, which are the more appropriate vehicles for driving performance in new build.

References:

Greater Manchester Combined Authority. 2024. Greater Manchester Homes Decarbonisation Strategy: Accelerating retrofit across the city-region. Manchester: GMCA. Available here.

Question 8: 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?

The NHDG broadly agrees with the proposed list of activities that the Warm Homes Fund could support. The scope appropriately recognises that delivering warm, low-carbon homes requires a combination of clean heat, energy efficiency, smart technologies and wider enabling infrastructure rather than isolated single measures. However, NHDG considers that two categories of activity are missing and should be added.

Retrofit Assessment and Coordination

The proposed list covers installation but makes no provision for the assessment and coordination activity that must precede it. PAS 2035 requires that retrofit projects are overseen by a qualified retrofit coordinator and preceded by a whole-house assessment. They are the mechanism by which the correct sequencing of measures is determined, installation quality is assured, and the risk of poor outcomes is managed. Excluding assessment and coordination from the scope of eligible activities would create a perverse incentive to treat these functions as costs to be minimised rather than as central to delivery quality.

Demand for retrofit depends on good customer experiences and outcomes, with poor-quality installations damaging consumer confidence and demand for retrofit measures.¹³ Supporting coordination and technical design would therefore help improve quality, reduce delivery risk and give consumers and finance providers greater confidence in the works being funded.

Monitoring, Measurement and Performance Verification

As set out in NHDG’s response to Question 6, the Fund’s scope should include monitoring and measurement technology as an eligible activity. This could include smart meters, heat meters, heat pump monitoring systems, temperature and humidity sensors, and SMETER-enabled technologies. Performance verification is important both for consumer protection and for improving confidence among finance providers and investors. It is also key to the success of financing mechanisms that tie returns to energy bill savings. Without mechanisms to measure outcomes, there is a risk that schemes continue to reward installation activity without sufficiently understanding whether homes are actually delivering lower bills, lower emissions and improved comfort.

References:

Lowes, R., Woodman, B. and Speirs, J. 2020. Heating in Great Britain: An incumbent discourse coalition and an energy transition challenge. Energy Policy, 146, p. 111743. Available here.

Question 12: 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?

The NHDG agrees with the proposed list.

Section 2: Investing Across the Value Chain

Section 2A: Owner-Occupiers

Question 13: How do you think the Warm Homes Fund could best support owner-occupiers to invest in home upgrades?

The Warm Homes Fund can most effectively support owner-occupiers by acting as a market-catalysing financing mechanism that addresses both financial and behavioural barriers to retrofit, while leveraging private capital and delivering value for money. Critically, unlike the rented sector, there are no regulatory drivers requiring owner-occupiers to improve energy efficiency or adopt low carbon heating. In the absence of a regulatory stick, the Fund must therefore provide a sufficiently strong and well designed “carrot” through financial incentives and market reform to ensure that retrofit investments are economically and practically viable for households.

A primary role of the Fund should be to reduce upfront cost barriers through accessible, low-cost finance. Owner occupiers face high capital costs, long payback periods, and complex financing arrangements, all of which suppress demand. High interest rates, restrictive eligibility criteria, and perceived risk limit uptake. To address this, the Fund should deploy subsidised and de-risked financial products, including low or zero interest loans and guarantees, which improve affordability and make retrofit investments commercially attractive for households.

Alongside this, the Fund should use targeted funding to unlock otherwise unviable investment. While repayable finance should remain the core mechanism, there is a clear funding gap for households, particularly middle income and risk averse consumers, who may be unwilling or unable to take on debt without additional support. Time-bound and carefully targeted grant elements within blended finance models will be essential to bridge this gap.

The Fund must also act as a catalyst to leverage private investment at scale, explicitly addressing the structural tension between investor and consumer requirements. Private investors require sufficiently high returns to justify investment, whereas households demand low borrowing costs to make upgrades affordable. Without intervention, this misalignment prevents the market from functioning effectively. Government support is therefore essential to bridge the gap between required returns and affordable financing, through risk sharing mechanisms, guarantees, and co-investment.

Furthermore, the Fund should support the development and scaling of innovative financing and delivery models. Mechanisms such as property linked finance, energy as a service, and subscription-based models can remove upfront costs and better align payments with realised benefits over time. The Fund should allocate a defined portion of funding to act as a testbed for innovation, supported by robust monitoring, evaluation, and consumer feedback.

Addressing non-financial barriers is equally critical. The Fund should prioritise simplifying the customer journey and strengthening consumer confidence. Financial support must be integrated within end-to-end delivery models, including impartial advice, accredited supply chains, and clear pathways to installation. This should be underpinned by strong consumer protections, guarantees, and quality assurance frameworks.

The Fund should also prioritise area-based, large-scale delivery models, which offer the best value for money. Aggregating demand at a local level reduces per unit delivery costs, improves supply chain efficiency, and enables consistent, high-quality delivery. Embedding funding within coordinated, place-based programmes will maximise impact while offering a clear route to scaling deployment.

In addition, the Fund must support supply chain development, skills, and manufacturing capacity to ensure that increased demand can be met efficiently and cost-effectively. Without parallel investment in the delivery ecosystem, supply chain constraints will continue to drive up costs and limit scalability.

Finally, the Fund should provide long-term policy certainty while maintaining value for money. A stable, multi-year funding framework will be critical to building confidence among households, industry, and investors. The use of repayable finance and recyclable capital will ensure that public funding can be sustained and scaled over time.

In summary, the Warm Homes Fund should operate not as a simple subsidy mechanism, but as a strategic market intervention tool. By combining low-cost finance, targeted public funding, and risk sharing mechanisms to align the needs of households and investors, the Fund can unlock large-scale private capital. When complemented by innovation, strong consumer protections, simplified delivery, and investment in supply chains and area-based programmes, this approach will drive scalable, cost-effective retrofit across the owner-occupier sector.

Question 14: 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?

Financial institutions are already using Energy Performance Certificates (EPCs) as a key input into the design and distribution of green financial products, particularly green mortgages and home improvement loans. EPC ratings provide a simple, standardised proxy for a property’s energy performance and anticipated energy costs, enabling lenders to segment customers, assess eligibility, and structure incentives. For example, preferential mortgage rates, cashback offers, or enhanced borrowing capacity are often linked to properties with higher EPC ratings or contingent on commitments to improve a property’s rating post-purchase.

However, the usefulness of EPCs for informing finance mechanisms is limited by issues with their accuracy and reliability. Research indicates that EPCs often overestimate energy demand, with a recent DESNZ study showing that the least energy efficient homes (band F and G) use significantly less energy than predicted, while high efficiency homes (Band A–C) often use more.¹⁴ Furthermore, EPC-linked policy frameworks can unintentionally shape market behaviour. Current funding and financing structures often prioritise achieving EPC band C, which can act as a de facto benchmark, discouraging higher-performing or innovative measures. Around 65% of homes in England are owner-occupied, representing the largest segment of the housing market and a critical target for green finance products.¹⁵

Instead, we would like to see greater emphasis on measured in-use performance as a tool to inform financial products. As SMETERs and other measurement approaches continue to grow in accuracy and reliability, we would like to see them integrated within finance products. Moreover, residents and institutional investors will have more confidence to participate in the green finance market if products are tied to actual measured outcomes rather than the unreliable projected assumptions in EPCs.

The Role of EPC Reform

The planned reform of EPCs, introducing multiple metrics including fabric performance, heating system efficiency, smart readiness and energy cost, has the potential to significantly enhance their role in financial markets. These improvements could enable lenders to develop more sophisticated, measure-specific or outcome-based financial products, better aligning lending with the actual performance and upgrade pathway of a property.

Beyond current applications, there are several wider implications of EPC use for financial products that should be considered. First, EPCs are likely to play an increasing role in linking finance to long-term property value and asset performance. As energy efficiency becomes more material to valuation, lower rated properties may face reduced access to favourable finance, contributing to a potential “green value gap” between efficient and inefficient homes. Second, EPC accuracy is critical for consumer protection and market confidence. Third, EPCs will be increasingly important for enabling scalable and investable finance models. More granular and reliable EPC data can support standardisation, aggregation, and portfolio-level investment, which is a key requirement for attracting institutional capital.

In summary, EPCs are already a foundational tool for informing green financial products, but their current limitations constrain their effectiveness. The proposed reforms present a significant opportunity to enhance their role; however, it will be essential to ensure that EPCs provide accurate, granular, and decision-relevant data, while avoiding unintended consequences for innovation, consumer outcomes, and equitable access to finance. Increasingly, we would like to see financial products and retrofit funding based on real-world measured outcomes rather than unreliable EPC assessments.

References:

Petros Ampatzidis, Emily Bowyer, David Coley and Victoria Stephenson. 2023. Decarbonising at Scale: Extracting strategic thinking from EPC and deprivation data. Building Services Engineering Research & Technology, Volume 44, Issue 6. Available here.
Ministry of Housing, Communities & Local Government. 2025. Chapter 1: Profile of households and dwellings. Available here.

Question 15: How could the loans scheme be designed to encourage new products or entrants into the market?

The loans scheme can be designed to encourage new products and market entrants by addressing structural barriers to entry, reducing and creating the conditions for innovation and competition within the owner occupier retrofit finance market.

A key priority is to reduce the cost of capital and improve accessibility to enable new entrants to compete effectively. Many existing financial products have seen low uptake due to high borrowing costs, restrictive eligibility criteria, and complex customer journeys, which also deter new providers from entering the market. The scheme should therefore provide low cost, government backed lending alongside guarantees and risk sharing mechanisms, ensuring that new entrants can offer competitively priced products that are attractive to consumers while still meeting investor requirements.

In addition, the scheme should provide patient and flexible capital aligned to innovation lifecycles, recognising that many new products and business models require time to demonstrate commercial viability. Evidence from innovation loan programmes highlights the importance of providing flexible repayment

structures, including grace periods and longer tenures, which enable organisations to develop and scale near market solutions without immediate repayment pressure. Applying this approach to retrofit finance would encourage new entrants to develop innovative propositions while managing delivery and commercialisation risk.

The scheme should also act as a blended finance platform to de risk innovation and crowd in private investment. New and emerging models, such as property linked finance, energy as a service, and subscription-based approaches, often struggle to attract commercial finance due to uncertain returns and fragmented delivery. Government intervention is therefore required to bridge the gap between investor return expectations and consumer affordability, enabling new entrants to bring forward viable products that would not otherwise reach market.

A further priority is to establish a structured test and learn environment for new financial products and delivery approaches. The retrofit finance market currently suffers from limited opportunities for new entrants to trial products. The scheme should therefore allocate funding for pilots and demonstrators, supported by robust monitoring and evaluation, allowing new finance products and retrofit approaches to be tested in real world conditions and scaled where proven to be effective.

Alongside financial design, the scheme must address non-financial barriers to market entry, particularly complexity and lack a consumer trust. Owner occupiers face challenges navigating fragmented markets, identifying suitable measures, and accessing trusted installers. To address this, the scheme should incentivise integrated delivery models, combining finance, advice, and installation through trusted intermediaries. This will reduce barriers for new entrants and improve overall market engagement.

The scheme should also support standardisation and improved data frameworks, enabling new entrants to design scalable and investable financial products. As data quality and consistency improve, particularly through EPC reform and wider system improvements, lenders will be better positioned to assess risk, tailor products, and aggregate investment opportunities.

Finally, long term policy certainty and a stable funding pipeline will be critical to encouraging new entrants. A clear, multi-year commitment from government will provide the confidence required for organisations to invest in product development, build delivery capability, and enter the market at scale.

In summary, the loans scheme should be designed not simply as a source of finance, but as a strategic mechanism to shape and grow the market. By combining low-cost capital with patient financing structures, targeted risk sharing and a test and learn approach, the scheme can enable new entrants to develop and scale innovative products. When coupled with simplified delivery, improved data, and long-term policy certainty, this approach will increase competition, expand consumer choice, and unlock significantly greater levels of private investment in the owner occupier sector.

Question 16: What loan attributes would be most va

The evidence suggests that the most valuable loan attributes are those directly address affordability, complexity, and consumer confidence barriers, which are currently suppressing uptake of green home finance.

Firstly, significantly lower or zero interest rates are critical. High borrowing costs are a key barrier to take up of existing finance products among owner occupiers.

Secondly, strong and viable consumer protections are essential to build trust. The Warm Homes Fund emphasises the need for “robust consumer protection improvements “, reflecting lessons learned from previous schemes. In practice, this includes clear safeguards on performance, transparent terms, and protections against mis-selling or unexpected costs, all of which are necessary to increase consumer confidence in taking on finance.

Thirdly, flexibility in repayment structures and product design adds material value. Innovative approaches such longer tenures aligned to asset lifetimes, or property linked finance models, can better match repayment profiles to energy savings and overcome concerns around long payback periods. This flexibility is particularly important in enabling households to invest facing short term financial strain.

Fourthly, product innovations that reduce perceived households’ risk are highly valuable. One of our members highlighted that many households, especially vulnerable groups, cannot engage with traditional debt-based finance, even at 0%, due to affordability and psychological barriers. This indicates strong value in hybrid or alternative modes that reduce or eliminate perceived debt exposure. It also highlights the important of developed a suite of finance options tailored to particular individuals and their circumstances.

Segmentation and tailoring of products to different consumer groups is essential. A “one size fits all” loan offering is unlikely to succeed given differing affordability profiles and needs. Expanding a suite of products, ranging from concessional loans for able to pay households to fully protected, non-repayable models for vulnerable groups, will be key to maximising overall market update.

To conclude, the following attributes are key to a successful loan offering:

Low / zero interest rates to address affordability barriers
Robust consumer protections for both the finance product and retrofit measures to build trust and reduce risk
Simple, integrated associated customer journey to reduce complexity
Flexible repayment models aligned to savings and asset life
Segmented product design tailored to different household needs.

Question 17. Would 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. Please specifically consider:
• how it could increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers
• the potential risks and unintended consequences for consumers, government and industry, such as friction in the property market.

Property Linked Finance (PLF) could support the aims of the Warm Homes Fund, but it should be positioned as one option within a wider financing offer rather than a standalone solution.

PLF has the potential to address two core barriers to retrofit: high upfront costs and long payback periods. By linking repayment to the property rather than the individual, it can support investment in measures such as solar PV, batteries and heat pumps, where benefits extend beyond typical ownership periods. This could help enable more whole-house upgrades and improve affordability for households who are able to pay back installations over time but lack access to upfront capital.

Despite this, there are several risks that would need to be carefully managed. Linking finance to the property could create friction during property transactions, particularly if obligations are not clearly understood or aligned with the value and lifespan of installed measures. Furthermore, there is also a risk that complexity or a lack of transparency could subsequently reduce confidence, particularly given the legacy of previous schemes. Strong consumer protections, clear disclosure, and simple product design will therefore be critical.

PLF is therefore unlikely to be suitable for all households. It may work best for equity-rich owner-occupiers but is less likely to support low income or vulnerable households, who may not engage with repayable finance. This reinforces the need for a segmented approach, alongside grant funding and other support mechanisms.

From a market perspective, PLF does not fully remove the risk of delivery. This is because of long payback periods, uncertain demand, and the interaction with mortgage lending, which may continue to limit private sector appetite without further government support. Early intervention may therefore be required to de-risk delivery and support market development.

In summary, PLF could play a targeted role in supporting deployment of low carbon technologies and reducing bills. However, its success will depend on careful design, strong consumer safeguards, and finally, alignment with the wider policy and funding mechanisms.

Question 18: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

There is a clear need for finance to support property-linked finance. Retrofit measures often require significant initial investment, while savings are realised over time. For many households, particularly low to middle income groups, this limits uptake without the need for financial support.

The private sector has not filled this gap for several reasons. Returns are often uncertain, with a long payback period and relatively modest bill savings compared to other lending products. The private sector generally demands a high rate of return, which is may not get through property-linked finance without some kid of government intervention.

Furthermore, there is limited consumer demand, reflecting low awareness and trust in retrofit measures. The complexity around change of tenure and what happens to the repayment obligation when ownership changes can also act as a deterrent to PLF.

Question 19: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Government finance could address the PLF gap through a blended, repayable finance model that reduces risk, lowers the cost of capital, and mobilises private investments at scale, while generating a modest long-term return.

The government could establish a central PLF facility providing upfront capital for retrofit measures, with repayments recovered through long term, property linked charges, enabled by legislation. These repayments, ideally aligned with energy bill savings, would create capital to be recycled through a revolving fund structure.

Critically, given the limitations of both grant-only schemes and purely commercial lending, government intervention should focus on risk sharing and market creation. Evidence from existing schemes demonstrates that grant funding alone cannot scale, while private finance is constrained by commercial requirements and risk exposure. A blended model can address this by combining public and private capital in a way that aligns differing incentives.

Government support could include:

First loss capital or guarantees to reduce investor risk and crowd in private finance
Provision of concessional capital to ensure consumer affordability, particularly over long tenures.
Credit enhancement and standardisation, improving investor confidence and enabling aggregation.

Over time, aggregated PLF portfolios could be securitised, allowing institutional investors to participate, with government retaining a subordinated position and continuing to earn returns. Delivery would likely operate through a national framework with local or private delivery partners, enabling scale while maintaining standardisation, consumer protection, and efficient administration. This reflects international precedent, where successful models combine public backing with private delivery and capital markets access.

Government returns would derive from long term repayment flows linked to properties, offering relatively low default risk due to the security of the asset and transferability on sale. While returns may be modest, they would be stable, predictable, and aligned with public policy objectives.

Overall, the Government’s role is to act as an anchor investor and market enabler, addressing key barriers, particularly high upfront costs, long payback periods, and investor risks, while ensuring finance is both scalable and sustainable.

Question 20: What are the wider policy barriers that may need to be overcome to realise the benefits from PLF? Please consider any specific areas of law, regulation or other policy which may need to change. Please also consider barriers that could limit take-up, and whether this might vary depending on whether the model was administered by a local authority, a green bank or other lender, a financial regulator, or a third party.

Delivering Property Linked Finance (PLF) at scale will require addressing a set of interconnected legislative, regulatory and market barriers, alongside other factors affecting consumer take up.

Legal barriers will need to be overcome. PLF would require primary legislation to enable a property linked charge (local land charge), priority relative to mortgages, and treatment within conveyancing. Without this, lender participation and market confidence are likely to remain limited.

There are also financial regulatory uncertainties, particularly where PLF falls within existing credit or mortgage regimes. A clear framework is needed to balance consumer protection with flexibility for innovation, noting lessons from the Green Deal. Fiscal and tax treatment remains unclear, including how PLF repayments would be classified, and implications for SDLT, VAT and local taxation. This uncertainty may deter both investors and delivery bodies.

There is also a risk that PLF could introduce friction into the property market. Standardisation of valuation approaches and clear disclosure requirements will be essential to avoid reduced market liquidity.

Effective deployment will also depend on data and eligibility frameworks, including improved EPC accuracy and standardised definition of qualifying measures. If projected savings are not trusted, the core PLF value proposition will be weakened.

Section 2B: Landlords and Tenants

Question 21: 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?

When answering please also consider the specific barriers and opportunities that financial institutions encounter when offering products to the private rented sector.

Barriers

Unlocking private rented sector (PRS) delivery requires addressing several structural barriers. The most significant is the split incentive between landlords and tenants, where landlords fund upgrades but tenants benefit from bill savings, limiting investment beyond minimum compliance. This is compounded by cashflow constraints, uncertainty on returns, and funding structures tied to tenant eligibility, which prevent upgrades during void periods when works are most practical. The fragmented nature of the PRS further increases complexity, with smaller landlords lacking capacity to navigate finance and delivery. High upfront costs and loan viability issues also remain significant barriers, alongside low consumer trust and the complex customer journey. In addition, data limitations, particularly inaccurate EPCs, reduce confidence in investment decisions, while poorly designed finance models risk creating friction at point of sale, as happened with previous schemes such as the Green Deal.

Opportunities

Despite these barriers, there are clear opportunities to accelerate PRS delivery. MEES tightening provides a strong regulatory trigger for investment, while aggregation across portfolios or areas can improve scale and investability.

Emerging performance-based and system-linked financing models can help address the split incentive issue and strengthen the techno-economic case for retrofit projects.

To capitalise on this, the WHF should support PRS-specific, cashflow-aligned finance, flex tenant eligibility requirements to enable access during void periods, and consider subsidising concessional lending where necessary. It should also

offer finance products in conjunction with impartial energy saving advice. In order to be eligible for finance, projects should follow robust quality assurance frameworks and be delivered according to PAS 2035. The Fund should support a range of complementary financing models, recognising that no single approach will suit all PRS stakeholders.

Question 22: 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?
Please consider whether different barriers exist for new build versus retrofit, as well as the financing structures or products that could best incentivise the deployment of warm homes technologies above minimum regulatory standards. Please also consider differences in Housing Association property ownership structures (for example, direct development, partnerships or joint ventures), and whether this would affect the ability of those social housing owners to take on a loan.

Social landlords are the most scalable delivery channel for the Warm Homes Fund but face acute capital constraints, competing regulatory demands and financing limitations that vary by provider type and ownership structure.

Key barriers include:

Competing capital pressures: Social landlords also have to fund building safety work, damp and mould remediation, and other compliance requirements, which can crowd out retrofit investment even where the business case is strong.
Rent constraints and limited headroom: Rent-setting constraints limit ability to raise revenue to service borrowing at scale, especially for deep
Data and planning uncertainty: EPC inaccuracies and stock data gaps can lead to sub-optimal sequencing and investment Without reliable baseline performance information and measurement, social landlords and financiers are exposed to performance risk.
Upfront funding for investable models: Even when revenue-sharing or savings-sharing models are viable, landlords often need capital for enabling works and installation. Constrained balance sheets can therefore slow scale up and delivery of retrofit measures.

Question 23: 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?

Incentivising above-minimum standards in new-build social and affordable housing is important, however, we believe that the Warm Homes Fund should focus on the retrofit sector, as outlined our answer to Question 7. We have

identified some key risks and unintended consequences of diverting Warm Homes Fund financer towards the new build sector.

Crowd out retrofit investment
Funding could drift to new-build schemes at the expense of hard-to-treat, high-need existing homes, reducing equity and fuel poverty impact. Existing social housing is where the greatest energy performance deficit lies, and the Warm Homes Fund should primarily be focused on addressing it. Too broad a remit will reduce the impact it can deliver for fuel-poor households.

Duplicates existing regulations
There is a risk that public finance for new-build social housing simply substitutes for private developer investment, without generating additional energy performance improvements. The Future Homes Standard already mandates a high level of energy performance in new build homes. Developers should be able to meet this standard of energy performance without additional funding support.

Question 24: Would revenue and savings sharing models 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 Please specifically consider:

how it would increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers
the potential risks and unintended consequences for consumers, government and industry

Revenue and savings sharing models have significant potential to support the Warm Homes Fund’s aims by enabling deployment without upfront cost barriers and creating viable revenue streams for asset owners, particularly in social housing, where portfolio scale and stability support investability. In addition to energy bill savings, these models can be strengthened by incorporating wider revenue streams, including flexibility services, load shifting and potential future mechanisms such as carbon credits, which improve overall project viability and reduce reliance on consumer contributions. This is particularly important for low-income households, where traditional debt-based financing is not viable.

Low carbon technologies, including rooftop solar and battery storage, are now sufficiently mature to deliver commercially viable returns over the medium term. When integrated with smart technologies and optimisation, these systems can maximise value from export and flexibility markets, enabling more efficient system operation and genuine, sustained reductions in energy bills. As a result, revenue and savings sharing models are particularly well suited to social housing and place-based delivery, where aggregation and stable occupancy support scalability and long-term investment.

However, there are important risks and unintended consequences that must be addressed. For consumers, there is a risk of reduced flexibility or perceived ‘lock-in’ if tariff structures or contractual arrangements are not transparent and fair. Additionally, if realised savings are lower than expected because of a poor performing installation, then this can have implications for the viability of financing models.

For government and industry, scaling these models without robust commissioning, quality assurance and ongoing maintenance risks creating performance gaps that undermine both investor confidence and public trust. There is also a risk that poorly designed revenue-sharing arrangements capture a disproportionate share of value for investors rather than delivering meaningful bill reductions to end users. To mitigate these risks, the Warm Homes Fund should ensure strong consumer protections, require clear allocation of benefits between stakeholders and embed performance measurement and quality assurance frameworks so that outcomes are reliably delivered in practice as well as modelled upfront.

Question 25: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

There is a need for government finance to unlock revenue and savings sharing schemes at scale. Returns are often constrained by the need to deliver real, protected bill savings for tenants, and commercial capital may price risk too highly for schemes to stack up. In terms of project size and aggregation, private investors require a sufficient scale of deployment to achieve a sensible return on investment. Individual housing associations may not have sufficient stock to make a commercial revenue sharing programme viable without aggregation.

Additionally, the payback period for solar and battery installations is typically between 7 to 15 years, which is beyond the investment horizon of many private financial institutions without risk mitigation from government. Government-backed finance can help de-risk early deployment and support market confidence.

Question 26: How could government finance address this gap for revenue and savings sharing schemes, with repayable finance where government earns a return? Where possible, please describe how this model could work.

Please consider what different roles the government could play to stimulate adoption, and factors such as the scale of deployment required for an investor to see a sensible return as well as reasonable contract lengths for consumers.

Government finance could address this gap by deploying the WHF capital in ways that improves investability while maintaining tenant protections and delivering a return to government. One practical approach is to provide senior debt to aggregators or special purpose vehicles (SPVs) that fund installations across multiple landlords or buildings, with repayment derived from portfolio-level revenues, such as export income, flexibility services, or landlord-side savings, rather than from household debt. This allows government to earn a return through interest while managing risk through diversification and contractual performance requirements. Alternatively, WHF could act as a credit enhancement mechanism, providing a subordinated tranche or guarantee to reduce risk for senior lenders and thereby crowd in private capital at lower cost and at greater scale.

A further option is to link finance to verified performance outcomes, such as energy bill savings or in-use performance, incentivising quality installation and ensuring that projected savings and revenue materialise in practice.

Across all models, key design principles include a minimum guaranteed benefit for tenants, the avoidance of household debt and strong quality assurance and performance monitoring to ensure outcomes are delivered in practice and support long-term market confidence.

Question 27: What are the wider policy barriers that may need to be overcome to realise the benefits from revenue and savings sharing schemes? Please consider any specific areas of law, regulation or other policy which may need to change.

Key Policy Barriers

Metering and sub-metering regulations

Many revenue sharing models rely on sub-metering to allocate energy savings between landlords and tenants. Current regulations do not always facilitate this straightforwardly, particularly in multi-tenancy buildings.

Regulatory uncertainty around electricity supply

Models that involve landlords selling locally generated electricity to tenants may require regulatory clarification to avoid triggering energy supplier licensing requirements.

Planning and grid connection delays

The deployment of solar PV and heat pumps at scale on existing social housing stock can be delayed by planning consent requirements and grid connection queues. The Government should consider how the WHF can be used alongside wider grid connection reform to accelerate deployment.

EPC reform

The planned reforms to EPCs, including the introduction of the Home Energy Model, may change the way that solar PV and battery storage contribute to EPC ratings, affecting the financial incentives for landlords. The timely implementation of EPC reforms will support MEES delivery by ensuring all new EPC assessments and investment towards EPC C are informed by the new metrics.

Question 28: Are there differences in Housing Association property ownership structures (i.e. direct development, partnerships or joint ventures) or any other factors that would affect the ability of those social housing owners to take on a loan?

There are significant differences that exist across Housing Association property ownership structures that affect their ability and appetite to take on loan financing:

Directly developed stock

Housing associations that own and manage their stock directly have the clearest route to taking on WHF loans, as they retain control over both the investment decision and the ongoing rental income used to service debt.

Partnerships and joint ventures

Where social housing is delivered through partnerships with private developers or joint ventures, the ownership structure is more complex. Loan finance would need to be structured at the appropriate legal entity level, and security may be more difficult to provide. The WHF should ensure its loan products are flexible enough to accommodate these models.

Smaller housing associations

Smaller providers may lack the financial team capacity or credit rating to access commercial loan markets and may be disproportionately reliant on grant funding. The WHF should consider whether dedicated support, such as aggregated lending vehicles or advisory support, is needed to ensure smaller housing associations are not excluded.

Rent Standard constraints

As noted above, all housing associations face restrictions on rent increases under the Rent Standard, which constrains the revenue available to service debt. This means that the financial return on investment in energy efficiency improvements must come through other routes, such as reduced maintenance costs, improved asset values or revenue from solar and battery installations, rather than rent uplift.

Section 2C: Local Government

Question 29: Would area-based investment funds 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. Please specifically consider:
• how it could increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers
• the potential risks and unintended consequences for consumers, government and industry

Area-based investment funds can strongly support the WHF aims and represent the most effective vehicle for deploying solar PV, batteries and heat pumps at scale. Retrofit efforts should be coordinated through an area-based approach.

Contractors can deliver cross-tenure retrofit projects and upgrade whole streets at a time irrespective of whether homes are social housing, private rental, or owner occupiers. This generates economies of scale at the point of delivery for contractors, thereby making retrofit projects better value for money for all involved. It also means that entire communities can be upgraded at a time, contributing to regeneration on a community-wide scale. By aggregating demand across tenures, area-based funds reduce per unit installation costs, support integrated multi-measure delivery, and enable local authorities to direct investment to the most fuel-poor communities. The presence of existing investment funds indicates that this could be an effective delivery model for the WHF to deploy investment quickly. Benefits could begin to be realised rapidly where Mayoral Strategic Authorities with established delivery infrastructure, such as Greater Manchester and the West Midlands, are early recipients of WHF capital.

Several risks must be carefully managed.

Firstly, without sufficient quality assurance requirements, large-scale area-based programmes risk replicating the installation failures seen under ECO4. Strong consumer protection and quality assurance must remain vital components within all retrofit schemes. Strict oversight and scrutiny from local authorities and social housing providers, alongside robust procurement processes and contracting arrangements, significantly reduce the possibility of poor-quality installations.
Secondly, without clear additionality requirements, WHF finance for area-based delivery could substitute for investment that would have occurred anyway, reducing its net impact.
Thirdly, previous schemes failed due to the gap between predicted and actual savings. Area-based funds must therefore embed robust in-use performance monitoring to validate energy bill savings and maintain investor and consumer confidence.
Finally, there is a risk of geographical inequality, where areas with weaker local authority capacity or less-developed existing investment infrastructure are unable to access funding. The WHF should include dedicated capacity-building support to ensure that benefits reach communities across all regions, not just those with the most established delivery infrastructure.

Question 30: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

There is clear need for government finance to enable area-based retrofit investment funds. The high upfront cost of retrofit measures poses a significant barrier, particularly among the non-fuel poor sector where installations will not be funded by government grants. A suite of low-cost finance options is preferable to provide consumers with a range of financing options. Private investors require risk-adjusted returns that are incompatible with the affordable borrowing costs needed to make retrofit viable for most households and local authorities. Individual retrofit projects are typically too small and heterogeneous to attract institutional capital without aggregation, and payback periods of 10 to 15 years exceed standard private finance horizons.

Furthermore, to attract institutional investment, viable financing models must carry an acceptable return on investment for private investors, embed a high level of quality assurance and consumer protection to build investor confidence, and gather real performance data to track and evidence the impact of retrofit measures. Previous schemes failed due to the gap between predicted and actual savings, and without reliable in-use performance data, investors cannot accurately price risk and will not commit capital at affordable rates. Government intervention is therefore necessary to bridge these gaps, providing the first-loss capital, guarantees and performance frameworks that make area-based retrofit investable at scale.

Question 31: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work. Please also consider whether financing for retrofit could be meaningfully combined with existing local investment funds.

Government finance can address this gap by supporting area-based, blended investment models that combine WHF capital with existing local and national schemes. In practice, this could involve deploying WHF as repayable capital within local or regional investment vehicles, enabling social housing providers and local authorities to utilise it alongside grant funding to meet co-funding requirements and scale delivery. This would support the development of integrated, whole-area retrofit programmes, improving efficiency and reducing delivery costs. Where required, the Fund could also provide credit enhancement or aggregation support to attract private capital into these programmes.

Crucially, models should enable local authorities and delivery partners to act as coordinators of multi-measure, multi-tenure schemes, ensuring that investment is deployed strategically rather than on a piecemeal basis. Embedding measured performance, quality assurance and clear governance frameworks will be essential to ensure these programmes deliver both financial returns and meaningful reductions in energy bills.

Question 32: What are the wider policy barriers that may need to be overcome to realise the benefits of local investment funds?

Wider policy barriers must be addressed to enable local investment funds and area-based delivery at scale, particularly those relating to coordination, capacity and enabling frameworks.

Key policy barriers:

Fragmentation of funding streams

Fragmentation can create complexity for delivery partners and inhibit whole-house, whole-area approaches. The WHF should be designed to complement and align with existing schemes, enabling blended finance models that maximise economic, social and health outcomes.

Planning and grid connection delays

Deployment of solar PV, battery storage and heat pumps at scale on existing housing stock can be delayed by planning consent requirements and grid connection queues. There is an opportunity for the WHF to work alongside wider grid reforms and DNO coordination to alleviate local capacity constraints and unlock system-level value.

Local authority capacity

Many authorities lack the technical expertise and resourcing needed to design and manage large-scale, PAS-compliant programmes; dedicated capacity-building support will be essential to ensure consistent and effective delivery.

Data and standards alignment

Stronger data and standards alignment, including with ongoing EPC reforms and measured performance, is also needed so that area-based programmes can accurately target the worst-performing homes and ensure investments remain compatible with future regulatory thresholds.

Skills and workforce constraints

These constraints present a systemic risk, as area-based delivery depends on a stable pipeline of qualified installers and retrofit professionals; without coordinated local skills planning and investment, supported by clear labour market intelligence, delivery will be limited regardless of the availability of finance.

Question 33: 33. Would blended financing support draft Warm Homes Fund aims, when could benefits be realised, and what risks need to be considered? Please give evidence to support your answer. Please specifically consider:

• how it could increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers
• the potential risks and unintended consequences for consumers, government and industry
• whether these approaches should operate on a regional or national basis, and who should be eligible to access investment vehicles

Blended financing is essential to delivering the WHF’s ambitions at the scale and speed required, as it directly address the structural misalignment between investor return requirements and consumer affordability constraints. By combining WHF capital with private investment, devolved funding and grant elements, blended finance can reduce the cost of capital, enable large-scale aggregated programmes, and unlock additional revenue streams (e.g. flexibility services, load shifting and local network value). This improves overall project economics and accelerates deployment of solar, battery and heat technologies across domestic, community and small business settings. Benefits can be realised in the near term where delivery pipelines and aggregation structures already exist, particularly at a regional level aligned to mayoral and local authority areas. This allows schemes to be tailored to local housing stock and supply chains while achieving sufficient scale for institutional investment. However, risks must be carefully managed, including complexity and administrative burden from multiple local vehicles and inequity across geographies where capacity is uneven. There are also consumer protection risks if financial models are not paired with quality assurance, trusted advice and clear benefit-sharing. To mitigate these risks, government should develop standardised financial and legal templates, embed consistent quality through its ongoing review of the consumer protection landscape, and provide targeted capacity-building support to ensure all regions can participate effectively.

Question 34: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

There is a need for finance, as the private sector alone is unable to deliver the scale of investment required due to several structural barriers. These include risk aversion, where investors require returns that are incompatible with the low borrowing costs needed to make retrofit affordable; a fragmented and heterogeneous project pipeline, where individuals retrofit projects are too small to attract institutional capital without aggregation; and long payback periods, often exceeding 10 to 15 years, which fall outside typical private investment horizons. In addition, the lack of reliable in-use performance data, and the historic gap between predicted and actual energy savings, limits investor confidence and prevents accurate risk pricing. Together, these factors mean that without public intervention to de-risk and structure investment opportunities, private capital will continue to underinvest in the warm homes market, particularly in lower-income or harder-to-treat segments.

Question 35: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Government can address this gap while earning a return by deploying WHF capital in ways that anchor and de-risk blended investment structures. This could include:

providing senior debt to regional SPVs or aggregation vehicles, which fund retrofit across multiple tenures and are repaid through portfolio-level revenues such as energy savings, export income and flexibility services;
offering concessional lending at or near gilt rates, enabling the overall blended finance package to remain affordable for households and local authorities while still delivering a return to government; and
structuring recyclable capital models, where repayments are reinvested into further projects to maximise long-term impact.

Additionally, embedding performance-linked finance mechanisms, where a portion of returns are tied to verified outcomes, can incentivise quality and reduce underperformance risk. A key principle is that these models should build on and integrate with existing local investment structures and area-based delivery programmes, rather than creating parallel systems, ensuring efficient deployment scalability.

Question 36: What are the wider policy barriers that may need to be overcome to realise the benefits of blended finance? Please consider any specific areas of law, regulation or other policy which may need to change. Please also consider whether there are additional steps needed to ensure communities are able to also invest and share in the return of those investments and ownership of the assets.

Several wider policy barriers must be addressed to unlock the full value of blended finance. Planning and consenting processes can delay deployment of technologies such as solar PV, heat pumps and external wall insulation, and should be streamlined to support area-based delivery at pace. Grid connection constraints and delays remain a major barrier, particularly for solar and battery deployment, and there is a clear opportunity to align the WHF with wider grid reform and stronger coordination with DNOs to unlock system value and alleviate local capacity constraints. Enabling community investment and ownership is also important, as regulatory frameworks limit the ability for communities to participate in and benefit from local retrofit schemes. In parallel, skills and supply chain constraints must be addressed, as insufficient workforce capacity will limit delivery regardless of available finance, requiring coordinated local skills planning and investment. Finally, long-term policy certainty is critical to building investor confidence; a stable, multi-year framework for the Fund, combined with the use of repayable and recyclable capital, will provide the predictability needed to attract private investment while maintaining value for money for taxpayers.

Section 2E: Manufacturing, Supply Chain and Skills

Question 49: 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.

Bulk purchasing can support the WHF by reducing upfront costs while improving supply chain efficiency and accelerating retrofit deployment. However, its impact will depend on how it is integrated within delivery models.

The NHDG supports large-scale area-based retrofit as the most effective delivery model. Aggregating demand across defined geographies enables bulk procurement of materials and technologies which creates economies of scale and lowers costs per unit. These benefits are most effectively realised where procurement is linked to confirmed installation pipelines through coordinated place-based programmes.

Therefore, bulk purchasing can deliver faster and more efficient delivery at scale, but also reduce upfront costs for technologies and improve certainty and planning for the supply chain.

However, cost reduction will not drive uptake alone. Some of the key barriers that remain include:

low consumer awareness and trust
high upfront costs
product complexity
administrative burden across fragmented schemes
delivery risk for contractors

Trust is particularly critical. Following quality issues in previous schemes, both consumers and finance providers require assurance that retrofit is delivered to a high standard by trusted organisations, including clear accountability when issues arise. Without this, bulk purchasing risks increasing volumes without improving confidence or uptake. Bulk purchasing must hence sit in an integrated delivery and finance system aligned with successful programmes such as WH:SHF.

Question 50: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

No comment.

Question 51: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

No comment.

Question 52: 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.

Fragmented funding landscape: disjointed grant schemes increase complexity and administrative A more coherent system is needed, such as with the WH:SHF and the planned cross-tenure low-income scheme.
Trust and market confidence: following historic quality issues, consumer and investor trust has significantly Finance providers require assurance that delivery is undertaken by trusted organisations with robust quality. Rebuilding trust in the market is essential to unlock bulk purchasing and wider green finance.
Long-term policy and funding certainty: Bulk purchasing also depends on stable long-term demand which is undermined by short-term funding cycles and policy uncertainty.
Blended finance and scalable delivery: government can play a role through guarantees and regional retrofit funds, which will help reduce risk and attract investment. Blended finance can accelerate deployment by combining public and private capital.

Question 53: 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.

No comment.

Question 54: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

No comment.

Question 55: How could government finance address this gap with equity where government earns a return? Where possible, please describe how this model could work.

No comment.

Question 56: What are the wider policy barriers that may need to be overcome to realise the benefits of equity investment? Please consider any specific areas of law, regulation or other policy which may need to change.

No comment.

Question 57: 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. Please specifically consider:
• how it could increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers
• how it could facilitate skills provision that is linked to forecasted local deployment pipelines, employer demand or area-based retrofit programmes
• the potential risks and unintended consequences for consumers, government and industry

Mobilising finance for skills and training will play a critical role in enabling delivery of the WHF by addressing current workforce shortages, one of the key constraints on scaling retrofit activity.

Investing in a robust retrofit workforce is crucial to meet home decarbonisation targets, while ensuring project quality and safety. A skilled workforce is essential to ensure the effective design and implementation of retrofit projects, in turn maximising the potential to reduce energy consumption and greenhouse gas emissions. But investment is not enough; training support must be directly linked to employment outcomes and delivery pipelines. This matches up the supply of skills with the needs of individuals and businesses, ensuring that investment is prioritised towards those skills with the greatest employer demand.

The NHDG supports a model where skills provision is integrated with delivery. Area-based retrofit programmes and regional delivery structures provide a strong foundation for integrated training and delivery hubs. This supports local supply chains and reduces fragmentation. This approach aligns training with real project demand and supports more efficient deployment. Schemes such as Warmer Homes Scotland demonstrate that with a stable delivery pipeline, businesses are willing to invest in workforce development. Skills loans would support the WHF’s aims by expanding workforce capacity to meet demand and supporting regional supply chains.

Question 58: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

There is a clear need for finance to support skills and training in the retrofit sector.

Training providers, including further and higher education institutions, lack sufficient teaching capacity and capability in key areas. There is a national shortage of teachers and tutors, particularly in non-mainstream areas of construction like retrofit, exacerbating this challenge. The limited capacity and capability of trainers is compromising the quality of retrofit training, and without properly addressing this challenge, these risks will increase as demand grows.

The private sector has been unable to fill the gap for several reasons including:

uncertain demand pipelines: investment in training is closely tied to expectations of future work. Without long-term policy and delivery pipelines, businesses will be reluctant to invest in workforce
misalignment between training and development: there is limited uptake when training is not linked to guaranteed employment
cost and risk for SMEs: smaller firms face financial and operational risks when investing in training, especially when it entails upfront costs without guaranteed returns .
policy-driven demand: skills demand in retrofit is dependent on government policy, and without clear long-term commitments, private actors will be unlikely to invest at the required

Finance for skills and training is therefore critical and needs to be maximised to have the intended impact. There is also a clear role for government finance as a market enabler.

Question 59: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Government finance should support skills to align with delivery. One way to do this would be to link training finance to aggregated programme delivery pipelines, such as area-based retrofit schemes. Here, risks are reduced and returns are more predictable.

Government could support this through:

blended finance to anchor investment in regional retrofit programmes
integrated delivery and training models within programmes that combine installation and workforce development
structuring finance so that repayments are supported by ongoing participation

Financing structures should remain scalable and align with clear delivery pipelines.

Question 60: 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.

One of the primary barriers to realise benefits of skills loans is the lack of long-term policy certainty and delivery pipelines.

Skills investment can only scale when the supply chain has confidence in the long-term demand for related skills. Short-term funding cycles and fragmented policy undermine this and reduces willingness to invest in training and workforce development.

Key barriers include:

Uncertainty of pipelines: without long-term programmes and clear regulatory direction, businesses are unable to justify investment in skills
Fragmented funding: this increases complexity, reducing efficiency in training and delivery
Misalignment of training provision: Training provision is often misaligned with employer demand.

To address these, policy should:

focus on providing long-term programme certainty;
embedding skills and training as an enabler of the WHP and WHF;
supporting regional delivery structures to offer stronger alignment between training and employment and; ensuring consumer trust and quality to drive a steady demand.

Section 2H: Other Use Cases

Question 70: What other potential use cases are there for the Warm Homes Fund?

The WHF could support a broader set of enablers critical to delivering retrofit at scale and ensuring long-term market resilience.

Support for green finance market development

Green mortgages represent a key instrument for scaling owner-occupier uptake. Government should consider targeted regulatory and policy measures to increase adoption, including clearer links to property performance and stronger integration with retrofit delivery programmes. Developing a coherent system of green finance products around existing schemes is essential to unlock demand beyond the social housing sector.

Enablers across the value chain

The WHF should support activities that enable high-quality retrofit including retrofit coordinator costs / PAS-compliant delivery, whole-house assessments, digital retrofit infrastructure and data platforms, supply chain finance mechanism to support SMEs.

Blended and regional retrofit delivery

Support the development of regional and area-based financing and delivery structures such as blended finance models. Either through guarantees, simplified finance structures, which help crowd in private capital at scale and maintain consumer protections.

National Home Decarbonisation Group Warm Homes Fund: Call for Evidence

Section 1: Warm Homes Fund Strategic Case, Aims and Scope

Strategic Case

Question 1: 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.

Question 2: What evidence is there on the factors that most significantly limit the uptake of green finance?

Delivery Quality and Trust in the Market

Affordability and the Cost of Borrowing

Upfront Cost Perception and Consumer Awareness

Policy Fragmentation and Lack of Long-Term Certainty

Question 3: What wider loan or equity-based interventions in the warm homes market could unlock demand at scale?

Area-Based Delivery as the Primary Vehicle for Institutional Finance

Aggregated and Portfolio-Level Financing

Local Authority Leadership and Cross-Sector Collaboration

Pay-As-You-Save and Energy-as-a-Service Models

Question 4: 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.

Grants Should Remain the Foundation for Low-Income Households

Innovative Finance Models for Low-Income Households

Blended Finance and Eligibility Gaps

Potential Aims, Scope and Eligibility

Question 5: Do you agree with the proposed overarching aims of the Warm Homes Fund? Please provide evidence to support your answer.

Question 6: 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.

Monitoring, Measurement, and Performance Verification

Question 7: 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.

Question 8: 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?

Retrofit Assessment and Coordination

Monitoring, Measurement and Performance Verification

Question 12: 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?

Section 2: Investing Across the Value Chain

Section 2A: Owner-Occupiers

Question 13: How do you think the Warm Homes Fund could best support owner-occupiers to invest in home upgrades?

Question 14: 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?

The Role of EPC Reform

Question 15: How could the loans scheme be designed to encourage new products or entrants into the market?

Question 16: What loan attributes would be most va

Question 18: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 19: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Section 2B: Landlords and Tenants

Question 21: 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?

When answering please also consider the specific barriers and opportunities that financial institutions encounter when offering products to the private rented sector.

Barriers

Opportunities

Question 23: 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?

Question 24: Would revenue and savings sharing models 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 Please specifically consider:

how it would increase solar, battery and heat pump deployment into domestic, community and small business settings and reduce energy bills for consumers

the potential risks and unintended consequences for consumers, government and industry

Question 25: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 26: How could government finance address this gap for revenue and savings sharing schemes, with repayable finance where government earns a return? Where possible, please describe how this model could work.

Please consider what different roles the government could play to stimulate adoption, and factors such as the scale of deployment required for an investor to see a sensible return as well as reasonable contract lengths for consumers.

Question 27: What are the wider policy barriers that may need to be overcome to realise the benefits from revenue and savings sharing schemes? Please consider any specific areas of law, regulation or other policy which may need to change.

Question 28: Are there differences in Housing Association property ownership structures (i.e. direct development, partnerships or joint ventures) or any other factors that would affect the ability of those social housing owners to take on a loan?

Section 2C: Local Government

Question 30: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 31: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work. Please also consider whether financing for retrofit could be meaningfully combined with existing local investment funds.

Question 32: What are the wider policy barriers that may need to be overcome to realise the benefits of local investment funds?

Question 33: 33. Would blended financing support draft Warm Homes Fund aims, when could benefits be realised, and what risks need to be considered? Please give evidence to support your answer. Please specifically consider:

Question 34: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 35: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Section 2E: Manufacturing, Supply Chain and Skills

Question 49: 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.

Question 50: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 51: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Question 52: 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.

Question 53: 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.

Question 54: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 55: How could government finance address this gap with equity where government earns a return? Where possible, please describe how this model could work.

Question 56: What are the wider policy barriers that may need to be overcome to realise the benefits of equity investment? Please consider any specific areas of law, regulation or other policy which may need to change.

Question 58: Is there a need for finance here, and what are the barriers that prevent the private sector from filling it?

Question 59: How could government finance address this gap with repayable finance where government earns a return? Where possible, please describe how this model could work.

Question 60: 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.

Section 2H: Other Use Cases

Question 70: What other potential use cases are there for the Warm Homes Fund?

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National Home Decarbonisation Group
Warm Homes Fund: Call for Evidence