Post-election roundup: what’s the impact on green homes and green finance?

The UK is facing a significant challenge with its ambitious green home improvement goals. According to the Royal Institution of Chartered Surveyors (RICS), approximately £250 billion is needed to bring the UK’s housing stock up to the required standards, affecting around 29 million homes. The current rate of retrofits is far below the necessary pace, with only about 17,000 retrofits being completed each month compared to the required 80,000.

The Labour Party’s policies aim to address these challenges through five key areas, the first two of which are of particular interest to green homes and the housing market:

1. Kickstart economic growth
2. Make Britain a clean energy superpower
3. Take back our streets
4. Break down barriers to opportunity
5. Build an NHS for the future

Kickstart economic growth

• Wealth fund – A national wealth fund will be created to enhance economic stability. The government aims to partner with the private sector to achieve its goals and grant more powers to local and regional authorities. These policies may indirectly impact green homes and green finance by increasing supply chain resilience.
• Housing – The Labour government plans to build 1.5 million new homes, adopting a brownfield-first approach and committing to preserving the green belt. They aim to significantly increase social and affordable housing while ensuring high-quality, well-designed, and sustainable homes. With last year’s construction of 230,000 homes, the new target of 300,000 homes per year is ambitious. However, the constraints of using brownfield sites, increasing affordable housing, and maintaining sustainability may pose challenges.
• The property market – The Labour government intends to give first-time buyers priority in purchasing new homes by collaborating with local authorities. They plan to make the mortgage guarantee scheme permanent and reduce the stamp duty threshold for first-time buyers from £425,000 to £300,000. These measures are expected to impact the housing market demand and support first-time buyers in their home-buying journey.

Make Britain a green energy superpower

• Great British Energy – One of the most high profile pledges is the establishment of Great British Energy to secure energy independence, with a goal of significantly increasing renewable energy generation by 2030. This initiative is supported by an £8.3 billion investment and aims to lower energy bills, potentially influencing homeowners’ decisions to invest in green upgrades.
• Warmer homes – A £6.6 billion plan also aims to upgrade approximately 5 million homes, primarily through grants and low-interest loans facilitated by local authorities. This initiative will also involve the private sector, including banks and building societies, to provide additional financing. Despite this significant investment, there is still a need for more funding to reach the goal of upgrading 29 million homes.
• Private rented sector – The Labour government plans to reintroduce minimum energy efficiency standards. Previous proposals aimed to bring private rented homes up to a C energy rating with a maximum spending cap of £10,000 for the landlord. The specifics of this policy, including any additional support for landlords, are yet to be detailed.
• Net zero – The government aims to make the UK the green finance capital of the world. This includes mandating financial institutions and FSTE100 companies to implement plans aligning with the 1.5-degree goal of the Paris Agreement. This approach is expected to drive significant investments in green finance and sustainable practices.

The Labour government’s policies present both opportunities and challenges for the housing market and green homes. To dive deeper into these topics and hear insights from our panelists Rachel Hunnisett and Tracie Burton, watch the full webinar on YouTube.