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CIH welcomes added flexibility in latest wave of Social Housing Decarbonisation Fund
The Chartered Institute of Housing (CIH) has welcomed “significant” changes to the design of the government’s Social Housing Decarbonisation Fund (SHDF).
Matthew Scott, policy and practice officer at the CIH, said the government’s latest guidance should make delivery easier and responded to some of the issues with the scheme the sector had raised in the past.
“The publication of the draft specification and timeline is very welcome and contains some significant positive adjustments from previous waves,” he said.
“The new low-carbon heating incentive, creation of a strategic partnerships route, and added flexibility for smaller housing providers shows that DESNZ [the Department for Energy Security and Net Zero] have taken on board feedback from the sector and should improve delivery over the coming years.”
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On Monday, DESNZ published its draft guidance for Wave 3 of the SHDF.
From April 2025, £1.2bn of funding will be available for housing providers to make “fabric-first” energy-efficiency improvements to their homes.
There are two routes to access funding under Wave 3, with most grant recipients expected to access funding through the Challenge Fund.
The strategic partnership route will be a special arrangement between DESNZ and organisations with a proven track record of delivery at scale will offer a more flexible delivery process.
Most applications should include a minimum of 100 homes, but small social housing landlords that own or manage fewer than 1,000 homes can apply with fewer than 100 homes.
A clarification period for prospective applicants to ask further questions ends on 3 June. All grant funding for Wave 3 must be spent by the end of March 2028, while projects must be delivered by the end of September 2028.
There is also a new optional low-carbon heating incentive for homes on the gas grid. Up to 10% of homes in an application can gain access to a £20,000 grant fund per home to install low-carbon heating measures on the gas grid, instead of the usual £7,500 off the gas grid cost cap.
Low-carbon heating measures eligible for this offer include air-source heat pumps, ground-source heat pumps, shared ground loops and heat networks. Unlike the rest of the scheme, this grant requires no match funding from providers.
The SHDF was launched in 2020 as a demonstrator scheme, with £61m allocated to councils to retrofit more than 2,100 social homes to have an Energy Performance Certificate (EPC) rating of Band C or higher.
Wave 1 of the fund, launched in August 2021, offered £179m to landlords bidding as part of a council-led consortium.
Wave 2.2, announced in October 2023, is a top-up to the £778m funding for Wave 2.1 announced in March 2023, which is currently in delivery. The successful bidders for Wave 2.2 were revealed in March.
Over £75m will be allocated to 42 councils and housing associations in the latest wave of the fund, the government said, which will be used to improve 8,800 homes with energy-efficiency upgrades.
In December 2023, the SHDF was allocated a further £1.25bn for 2025-26 to 2027-28.
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