Warm Homes Plan: What the UK needs to get retrofit right

The UK has one of the oldest and leakiest housing stocks in Europe and most existing homes in England are more than 60 years old, with around one in five being more than 100 years old.

Citizens Advice has estimated that over 15 million homes across Great Britain can be classed as energy inefficient, with an EPC rating of C or below. This has significant social and environmental impacts, keeping energy demand, and bills, high. National Energy Action estimates that those in fuel poverty are paying up to £417 more per year for energy due to inefficient homes.

In the context of a cost of living crisis alongside stubbornly high energy prices, it has never been more important to upgrade the UK’s housing stock to permanently bring down our energy bills.  

Despite this, previous policy progress on energy efficiency has been inadequate and has contributed to slow installation rates. According to the Climate Change Committee (CCC), rates of government funded energy efficiency measures have not been increasing and decreased between 2022 to 2023.

Heat pump installation rates will also need to significantly increase across the UK: the Heat Pump Association estimates that there were over 98,000 heat pump sales in the UK in 2024, yet this will need to increase to around 1.5 million by 2035 to be line with the CCC’s Balanced Pathway.  

It is against this challenging backdrop that the UK Government has set itself an ambitious target of retrofitting 5 million homes across the UK over this parliament. This is set to be achieved through the Warm Homes Plan, backed by £13.2 billion in funding.

A significant increase in pace and scale of delivery is required, if this is to be achieved and it will be crucial to get the Plan right so that households feel the tangible benefits from the net zero transition.  

The UK Government have already set out several details regarding the Plan, including £3.4 billion of funding, which was allocated in the 2024 Autumn budget. Progress has been made on some enabling policies, such as the publication of the EPC reform consultation and the introduction of the Clean Heat Market Mechanism in April this year.

However, detail is still lacking on how most of the funding will be spent, as well as progress on policies that will incentivise people to upgrade their homes. 

In this report, we refer to retrofitting people’s homes. Retrofit is a term which refers to the installation of any energy efficient upgrade in an existing property which will reduce its energy demand. This can include big and small energy efficiency improvements, such as draught proofing or solid wall insulation.

Retrofit also covers the installation of low carbon technologies, including home renewable and storage solutions as well as low carbon heating systems, such as heat pumps.  

This report sets out key policies we believe the UK Government should take forward to achieve the ambition of the Warm Homes Plan and beyond to upgrade the UK’s housing stock at pace. It has been developed through consultation across our organisation to identify policy priorities.

Policies are categorised into five pillars that each contribute to the overall outcome of upgrading the UK’s housing stock. There are cross overs and interrelation between each pillar and they should be viewed as a comprehensive policy package, rather than seen in silos.  

While most people are concerned about climate change, many do not understand what they can do to reduce their own impact. To date, there has been little communication at a national level to raise public awareness of the net zero transition, why they should engage and what the associated benefits are.

This has resulted in the UK public not feeling part of the transition, with a recent survey of UK homeowners finding that 48% of respondents felt the net zero transition was happening to them and over a third felt they could not engage with it at all.  

Public knowledge of energy efficiency measures and low carbon technologies also remains low. Recent research found inaccurate beliefs and poor knowledge to be widespread amongst those surveyed.

For example, 73% of British consumers surveyed stated they don’t understand what a heat pump is and 57% believed home insulation doesn’t work well in older homes. Misinformation and negative stories also contribute to scepticism and a lack of trust around low carbon technologies, acting as a barrier to action.  

For households looking to upgrade their homes, the current process is complex and confusing. People are unsure where to find trusted information on suitable measures for their property and struggle to know if they are eligible for financial support.

This is most prevalent in England, as advice services are already in place in Scotland, Wales and to some extent in Northern Ireland. Although there are pockets of local advice in parts of England, overall provision is variable and there remains a postcode lottery for households.  

The lack of a trusted, single point of contact for retrofit advice makes it difficult for households to have the confidence and procedural ‘know how’ to act.

Our research shows that 49% of homeowners in England don’t know where to get independent, impartial advice on making improvements to their home and 36% aren’t confident in assessing where to start.

Post-installation advice is also lacking, which means households have little support if they don’t understand how to effectively operate their new system or what behaviour changes they need to make. This could negatively impact those in fuel poverty, for example by pushing up energy bills due to running a system incorrectly.

Advice is also lacking for more complex retrofit cases, such as those living in flats who want to act collectively or for landlords looking to upgrade multiple properties. 

Overall, in England there is no smooth customer journey to guide people from initial awareness of the transition through to getting measures installed in their homes. We see this as a critical policy barrier that the Warm Homes Plan must address.

Therefore, to create an enabling information and support infrastructure, we recommend the following:  

The UK Government should launch a national awareness raising campaign. This should offer a positive vision of the net zero transition and the role the public can play, including the benefits of energy efficiency measures and low carbon technologies. Reaching those who are or have become disengaged with the net zero transition will also be critical.

As such, approaches should be based on robust research to understand what will resonate most with specific demographics. This should include financial savings, as well as other co-benefits such as health, warmth and property value.

Any campaign should make use of all avenues to normalise retrofit in the public consciousness, including advertising in places most people will come across, such as bus stops, supermarkets, TV, radio and social media. 

It’s also important that any national awareness raising campaign tells people where to go or what to do next to act on the information they’ve received from the campaign, such as signposting to advice services for personalised advice on what they can do to upgrade their home.

It may therefore make sense for any UK government led campaign to focus on England, with the devolved governments leading their own campaigns, given that the call to action would likely be different due to the devolved nature of financial support for retrofit.  

Once people are engaged and aware of the importance of retrofit, they should be signposted to action-oriented advice, which outlines what their next steps are and what measures would be suitable for their property.

The UK Government should therefore put in place a national retrofit advice service in England to give people the confidence to invest in upgrading their homes. This would act as a clear single point of contact for households along the retrofit journey through an online service, with in-depth advice via phone or in person for those who need it.

A national advice service should: 

• Provide households with clear, action-focused advice, tailored to their personal circumstances on the most effective way to upgrade their property. 
• Provide additional support for vulnerable and fuel poor households. 
• Refer households to relevant financial support to make it easy for them to identify what they are eligible for. 
• Refer households to trusted, qualified installers to make work happen faster and help address concerns around scams. 
• Provide post-installation support to help households with operating and maintaining newly installed low carbon technologies. This will help guarantee that carbon emission and energy bill savings are realised in homes.  
• Help consumers get further support or redress if they experience problems.  
• Provide advice for all building and tenure types. This should include advising tenants on what actions they can take as well as specific advice for flat owners. 

In comparison to the £13.2 billion committed to in the Labour Party manifesto to deliver the Warm Homes Plan, a national advice service is a low cost measure which will be crucial to support effective delivery of public funding.

Based on our delivery experience, we estimate that a service reaching all residents in England, would cost in the low £10s of millions (depending on scope). Our delivery experience also shows that advice provides significant return on investment.

Every £1 spent on expert, tailored advice returns almost £15 in lifetime savings for the households we advise through Home Energy Scotland, the flagship advice service we deliver on behalf of the Scottish Government.

A national service in England must also work alongside existing and any future national statutory energy advice service and current local advice services, offering a simple and seamless consumer journey.

Where local retrofit advice provision is in place, the national service should triage consumers’ broader advice needs and free up local services to focus on delivery and more complex retrofit cases.

We have outlined how a national retrofit advice service would support the effective delivery of the Warm Homes Plan in our briefing published last year. 

It won’t be possible to reach all households in the same way, so local engagement will be key. There should be a joined-up approach between local and national engagement activities, for example through consistency of branding and signposting to support. 

A growing number of combined and local authorities are setting up retrofit one stop shops to support their residents from engagement to after-care when upgrading their homes.

From our experience delivering Home Energy Advice North East, we know the importance of a trusted end-to-end solution that is accessible to all residents. These place-based approaches will be an important part of accelerating the number of homes being retrofitted, as well as reducing rates of fuel poverty and carbon emissions in local areas.

It will be crucial that a national retrofit advice service in England works in partnership with and supports all of these existing or future local advice services as a key piece of infrastructure. This will ensure a simple customer journey for households and effective referral pathways into and out of each service delivering the best outcomes for people. 

A national retrofit advice service in England should also partner with trusted intermediaries, such as charities and health care organisations, as is the case in Scotland and Wales. Building referral pathways will particularly help to reach the most vulnerable or hard to reach through existing customer support networks, to ensure they receive the right support.  

Partnerships will also help to facilitate local outreach activities to signpost households to support and advice available to them. For example, Home Energy Scotland advisors engage people while they are waiting for flu and Covid vaccinations as well as run webinars and workshops for community groups and to businesses’ employees. This helps to normalise energy efficiency and low carbon technologies and support action in their homes. 

Accelerating retrofit rates at scale will require a range of financial offerings for all households. In their manifesto, the UK Government allocated £13.2 billion to upgrade homes across the UK over the course of this parliament

We must see this full amount committed to and allocated when the Plan is published. However, we recognise that this will need to be complemented by private sector funding. It’s important to note that delivering the level of private finance required will require long term policy signals to help de-risk investment.  

The recommendations outlined below must be taken forward to ensure financial support is sufficient to drive demand, whilst also ensuring the most vulnerable are prioritised. 

Integrating UK government financial schemes and support under one single brand will make funding easier to identify and access. It will also be more recognisable for households and build trust over time. A national retrofit advice service should be a key part of this to help refer eligible households into government or local schemes, reducing fuel poverty and deploying UK Government money much more efficiently.  

Prioritising the most vulnerable for UK Government funding will ensure that the Warm Homes Plan is successful in reducing their energy bills, making their homes warmer and tackling fuel poverty. Bringing all fuel poor homes to EPC C by 2030 would have significant benefits, including saving households an average of £480 on their annual energy bills.  

Offering tiered grants would remove the cliff edge of support for those on low and middle incomes. This would ensure greater equity and account for the additional market weight of higher income householders benefiting from the scheme. In determining income bands, recognition should be given to geographical differences in the cost of living and the number of people per household. Funding should be available for a range of measures to support whole house retrofit. 

Households should be able to combine these low cost loans with UK Government grants to address the upfront cost of installing energy efficiency measures and low carbon heating and reduce any complexity for households.

Loans could also be flexible and allow households to invest in non-energy related measures to account for pre or post installation work that needs completed. This is the approach that has been taken in Ireland’s Home Energy Upgrade Loan scheme, where up to 25% of the borrowed amount can be used for other works, such as redecoration post-install.

UK Government backed loans would also encourage the private sector to bring forward innovative and attractive financial offerings, such as green mortgages and property linked finance.

It is important that trusted information and impartial, tailored advice is available to increase demand for and confidence to take out these financial products. 

It is important that any financial offering accounts for the variation in building types and tenures, as explored further in the next pillar, so that they are also able to upgrade their properties. This includes groups of flat owners seeking to act collectively and landlords looking to upgrade their properties.  

Households face a series of barriers to installing low carbon heating systems, such as heat pumps, at every point in the customer journey.  

Firstly, too few consumers have sufficient understanding of heat pumps, with 50% of UK homeowners stating they think there is too much conflicting information about the technology.

There is also distrust of heat pumps as some consumers consider them a new and unfamiliar technology. This is combined with a lack of clarity amongst the public on whether they should invest in low carbon heating and which solution is most suitable for their home.  

When it comes to investing, the upfront cost remains high for many. Air source heat pumps (ASHP) typically cost between £10,000 and £13,000 to install, a significant capital cost for people. In England and Wales, many households cannot afford this even after receiving a £7,500 grant from the Boiler Upgrade Scheme (BUS), with as many as 30% of working age adults in Britain living in families with savings below £1,000.  

The energy bill savings for homes switching to a heat pump are largely dependent on what type of heating system is being replaced. In general, heat pumps should be cheaper to run than other fuel types, such as coal or oil, as they are much more efficient.

However, the situation is less positive for homes using gas to heat their homes as the price of electricity in Great Britain has typically been three to five times more expensive per unit than gas. The running costs of heat pumps can therefore be a disincentive for households switching from a gas boiler, as it makes the energy bill savings too low to justify the upfront investment. The CCC have also found that without policy intervention, the running cost of heat pumps will not reach parity with a gas boiler until 2035.  

Households also face challenges during the installation process. This includes the disruption caused and the installation time compared to installing a new gas boiler, which can be critical for households in an emergency, such as if their boiler breaks down.

Research by Nesta also identified that households need support to run their heat pump efficiently. This gap in knowledge could have detrimental impacts for those in fuel poverty if lack of knowledge of how to operate the system properly leads to an increase in their bills or the household not using the system altogether. The lack of trusted, expert advice in England also means there is no single point of contact for households who need support post-installation. 

To accelerate the deployment of low carbon heat, we recommend that the Warm Homes Plan takes the following steps: 

The UK Government needs to address low awareness and negative perceptions of low carbon heating. As recommended above, as part of a long-term national awareness raising campaign, a positive narrative around low carbon heating is needed, including myth busting to counter the spread of misinformation.

Research has shown that the British public would support this, with 82% in favour of a national information campaign to encourage sustainable behaviour change. It’s good to see the UK Government’s recently launched heat pump campaign, “Feel All Warm and Fuzzy Inside”, to encourage households in England and Wales to adopt heat pumps and apply for the Boiler Upgrade Scheme and we are keen to see what  impact this has.

However, there also needs to be a broader national campaign on net zero that highlights the importance of low carbon heat in achieving net zero, with a range of messaging that motivates different demographics to act.  

Reducing both running costs and upfront costs will be critical enablers to accelerate the deployment of low carbon heat. 

To help households overcome the upfront costs, the Plan should provide attractive financial offerings across the income scale to fill in the significant gap left by the BUS, such as a UK Government backed loan scheme which can be used alongside the BUS to cover the remaining cost.  

For homes that won’t be suitable for a heat pump, there must be financial support available so that they can access other types of low carbon heating, including connection to a heat network and innovative systems such as thermal stores and heat batteries. As such, government funded schemes across the UK, for example  the BUS, should allow room for innovative technological solutions to increase.  

Social and environmental policy levies account for an estimated 16% of electricity bills in Great Britain. To address running costs, the Plan must outline a way to remove these legacy policy costs from electricity bills to incentivise low carbon heating uptake. This must be done in a way that ensures those without agency to switch from gas are not unfairly penalised.  

To increase the adoption of low carbon heat, access to personalised, expert advice will be crucial for households in England to give them confidence that they are installing the right measures for their home.

A national retrofit advice service in England, as covered above, would also provide a signal point of contact for households seeking information about how to effectively use low carbon heating systems, engage in new, flexible tariffs for their heating system and support access to redress in case things go wrong. 

While it’s welcome the UK Government have published several important consultations recently, swift implementation is key if we are to reach the 5 million target. As the foundation of many retrofit policy interventions, it is particularly important that EPC reform for England and Wales is prioritised to make them a more effective tool for households looking to invest and make changes to their homes.   

As the Plan also aims to reduce fuel poverty, it’s important that MEES for the private rented sector in England and Wales are updated, with sufficient enforcement in place. The Future Homes Standard must be introduced without further delay to ensure all new homes in England are built with high levels of energy efficiency, solar PV and low carbon heating as the default. 

To make progress on retrofitting all homes, retrofit policy must better reflect our diverse building stock and fill in specific gaps. For instance, clarity and consistency is needed in England’s planning system around upgrading historic properties and those in conservation areas, as well as ensuring adequate, bespoke advice is in place for homeowners and support to train a specialised workforce.  

To improve the energy efficiency of flats, we did some research recently that highlights some key lessons the UK can learn from policies introduced across Europe including the need for government backed support schemes specifically for flats.

The UK Government must follow through on its promise to consult on the role of hydrogen for domestic heating in 2025 and make a clear decision before 2026 to provide clarity and certainty for industry and households. This will also provide clarity and certainty for devolved governments, allowing them to take decisive action on decarbonising home heating

Committing to a 2035 phase out date for the installation of new fossil fuel boilers would also send a clear signal to the heating industry on what to plan for, as explored in the pillar below. Contrary to scare stories, there has never been a plan to “rip out” functioning gas boilers – instead, to replace them with a low carbon alternative when they naturally need to be.

This would align with the CCC’s Balanced Pathway and, by supporting market scale up, would potentially contribute to lower levels of public investment. 

The Plan must ensure that the consumer protection landscape is improved and made as simple as possible for households who install energy efficiency measures or low carbon technologies. Access to a simple redress scheme will be key to ensure that if something goes wrong, it is quickly put right.

Impartial, expert advice as outlined above can also help signpost people to the right place if things go wrong and provide post-installation support to ensure they understand their new measure or technology. This would guarantee there are no gaps in the retrofit customer journey and support households to maximise savings, both in relation to carbon emissions and energy bills, and feel the benefits. 

Overall, the Warm Homes Plan presents a significant opportunity for the UK Government to introduce a long-term, comprehensive strategy which takes a holistic approach to upgrading the UK’s housing stock. Sufficient investment will be key and we expect to see the Plan include the full £13.2 billion promised in the manifesto. 

This should provide the supply chain with confidence backed by legislation to fill gaps as highlighted above. The impact of this cannot be underestimated – if, for example, the date when new heating systems must be low carbon was confirmed, this would signpost the direction of travel for the market to be able to plan long-term.

Businesses would invest in their workforce to ensure supply can meet the surge in demand. Similarly, clarity as to whether the previous UK Government’s 600,000 annual heat pump installation target still stands is also needed, as well as additional installation targets beyond 2028, in line with the UK’s carbon budgets. 

The UK Government should work closely with industry on a strategy that sets out how it will develop the skill set of the current workforce, as well as new entrants into the industry.

The UK Government should consider following the Scottish Government’s development of a skills matrix for the clean energy sector to link skills, needs, roles, qualifications, standards and incentives, to ensure there is a skilled workforce across the country. 

The UK Government must raise awareness of retrofit as a career option and incentivise young people into the industry, as well as encourage existing workers to retrain.  

To effectively encourage young people into the industry, the number of courses and apprenticeships should be increased. As part of this, the quality of each individual apprenticeship should be monitored to ensure consistently high learning outcomes, irrespective of the apprenticeship employer or provider.

Promoting jobs in retrofit to school leavers and those in further education through additional incentives, such as targeted scholarships or bursaries, should also be considered. 

For the existing workforce, financial support to cover the costs of training or certification would help mitigate the disincentive of a reduced income for those retraining or upskilling. Grants should be available to all to cover accreditation costs to make green jobs more attractive. Additional grant support should be also afforded to employers in rural areas due to the higher costs associated with their staff attending training.  

The UK Government must also ensure that people from all backgrounds know about and can access these careers. This should be supported by effective marketing and communications around green jobs, apprenticeships and training opportunities, linked to a broader net zero awareness campaign that was proposed above.  

This should help make businesses aware of and understand government plans and the opportunities available to them. This will be crucial to ensure businesses, particularly SMEs, can navigate relevant legislation and take advantage of funding opportunities.

This programme must be nationwide to raise the capacity and capabilities across the supply chain to ensure households can access suppliers regardless of their location.