RETROFIT & SUSTAINABLE BUILDINGS constraints of retrofitting UK social housing The practicalities, opportunities and W


Social housing could become a catalyst for residential decarbonisation, but doing so requires a fundamental shift in how we finance, design and operate low-carbon domestic energy systems. James Williams, chief executive of Sero Homes explains


hen we think about the UK energy transition, we tend to picture huge offshore wind turbines or sprawling solar farms. We talk much less about the need to


decarbonise heat, despite how important this will be to meeting the UK’s statutory 2050 Net Zero target.


Heating the UK’s 28 million homes accounts for around 18% of the country’s greenhouse gas emissions, largely because most homes have traditionally relied on natural gas for heating and hot water. Decarbonising them will require changes to heating systems and improvements to energy efficiency across millions of individual properties. Social housing sits at the centre of this challenge. In England alone, housing associations and local authorities collectively provide around 4.5 million homes, which is often ageing and inefficient. Landlords need to decarbonise these homes while keeping energy bills affordable for residents, many of whom are particularly exposed to fuel poverty. They must also do so under significant financial pressure, with constrained budgets and competing demands for investment in maintenance, building safety and new homes.


But their sheer scale also creates an opportunity. Unlike the fragmented owner- occupier market, councils and housing associations can plan retrofit across entire portfolios and communities, creating economies of scale in procurement and coordinating energy generation, storage and consumption across groups of homes.


Retrofit should be treated as infrastructure


This fundamental shift starts with a change in mindset. Rather than a succession of capital improvements, we need to start thinking about retrofit as a long-term infrastructure investment. That change in perspective matters because the biggest obstacle to scaling social housing retrofit is not whether the technology exists, but how we pay for it.


The National Housing Federation has estimated that decarbonising housing association properties in England alone requires an additional £36 billion beyond existing planned asset management programmes. Across council and housing association properties nationally, estimates put the gross cost at more than £104 billion. Traditional funding and social landlords cannot carry this burden alone. Instead, we need new investment models that can capture and recycle some of the value created by retrofit to help fund the upfront investment required. So how do we do that?


Evolving the financing model


This is where third-party models such as Energy- as-a-Service (EaaS) can play a much greater role. With EaaS, a third-party finances and installs retrofit solutions rather than landlords paying the full cost upfront. They then recover that investment over time through payments for the energy services provided and other revenues generated by the assets. This can be structured through dedicated companies set up to finance and manage the projects, bringing in long-term investment from sources such as pension funds and impact investors. Crucially, repayments can be supported by the revenues generated by the energy system, rather than relying solely on landlords’ rental income. Finance can also help installers buy equipment in bulk, reducing costs and making it easier to deliver retrofit across whole areas or communities.


Public and private funding can also be 18 BUILDING SERVICES & ENVIRONMENTAL ENGINEER NOVEMBER 2026


combined, while government-backed guarantees could help attract long-term investment at a lower cost. Meanwhile, standardising technical specifications, procurement and financing structures can further reduce transaction costs and make it easier to aggregate hundreds or thousands of homes into investable portfolios.


Technology has to work as a single system


But treating retrofit as infrastructure changes more than how we finance it. It also means designing and operating homes as integrated energy systems that can deliver reliable performance over decades. A whole-home approach brings together the building fabric, heating, solar PV, battery storage and smart energy management rather than treating each technology in isolation. Sero’s solution, for example, uses sub-metering and real-time data to manage how energy is generated, stored and consumed within a home. Batteries can charge when on-site solar generation is high or grid electricity is less expensive and discharge during higher-demand and higher-cost periods. Across larger portfolios, these assets can also provide flexibility to the wider electricity system.


From individual homes to communities


This is also the direction the government’s own policy is heading. The Warm Homes Plan sets out a shift away from upgrading homes one at a time and towards an area-based approach: from 2027/28, low-income schemes will consolidate into a single programme that coordinates delivery street by street, with distribution network operators, local authorities and social landlords planning together through Regional Energy Strategy Plans and Local Area Energy Plans. For residents, that means entire streets upgraded together, rather than a scattering of individual homes.


EaaS is a natural fit for delivering retrofit at this scale. Because a single financing structure can aggregate hundreds or thousands of homes across a street or estate, it can coordinate solar generation, battery storage and energy use across the group rather than home by home, spreading the investment case — and the benefits — across the whole community. That gives landlords a delivery partner able to plan and fund upgrades at the pace the Warm Homes Plan calls for, rather than relying solely on their own balance sheets.


Moving from pilots to scale


Significant barriers remain. Regulation around local energy supply, energy sharing and how emerging energy service models interact with housing regulation needs greater clarity. Investors need long-term certainty around risk and returns while skills and supply chain constraints will become more pressing as deployment increases.


Resident engagement must also remain central. Retrofit cannot simply be something done to communities. It needs to deliver warmer, more affordable homes without adding complexity for the people living in them. The technologies required to decarbonise much of our housing stock already exist. The question is whether we can create the financial, commercial and delivery structures required to deploy them across millions of homes. If retrofit remains a series of one-off capital


projects, dependent on individual landlord balance sheets and short-term funding rounds, progress will remain constrained. But if we treat it as long-term infrastructure, bringing homes together at sufficient scale to attract investment and coordinating the technologies that generate, store and manage energy, there is a credible route to scaling it. That will require social landlords, government and institutional investors to work together. The goal should be to make retrofit investable and repeatable at scale, while reducing fuel poverty and delivering lasting value for residents.


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