Funding for social housing retrofit ‘doesn’t touch the sides’, Scottish minister told
Funding to retrofit social homes “doesn’t touch the sides”, Scotland’s acting minister for climate action has been told.
At the Scottish National Party conference, Gillian Campbell, communications and public affairs lead at the Existing Homes Alliance (EHA), acknowledged to Alasdair Allan that the Scottish government was funding retrofits through its Social Housing Net Zero Heat Fund (SHNZHF). But, she said, “it doesn’t touch the sides, to be honest”.
Mr Allan defended his government’s support for housing associations, adding that “no government can possibly foot the bill” for retrofit entirely.
The minister was speaking at a fringe event in Edinburgh on 31 August alongside the EHA, a coalition of housing and fuel-poverty organisations.
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The SHNZHF is running from 2021-26 and worth £200m. It helps social landlords to install green heating systems and energy-efficiency measures in their homes.
However, the Scottish Housing Regulator estimates that the total cost of retrofitting the country’s social homes could be as much as £9.3bn.
The fund is dwarfed by the Social Housing Decarbonisation Fund available in England, which was recently allocated £1.25bn for 2025-28.
Ms Campbell accepted that Scotland’s financial situation meant grant will not cover the full cost of decarbonising social homes and said housing associations should consider “innovative” funding approaches and “long-term partnerships with strategic investors”.
In response, Mr Allan said: “The sums that are needed to retrofit a lot of social housing are significant and we have to be quite frank in what we say as government.
“We are supportive of housing associations where we can do it, but no government anywhere could possibly foot the bill entirely for the cost of decarbonising the entire nation’s housing stock.
“This enterprise has to be a shared enterprise,” he added.
Mr Allan, who is MSP for the island constituency of Na h-Eileanan an Iar, said his local housing association “has not been slow in pointing out to me that they see this as a major task for the years ahead and we have to give them some certainty, but it cannot all be done by government”.
He added “it is very, very difficult to invest in any capital project, whether it’s helping out housing associations or investing in new industries, if Scotland’s capital budget is being cut by the UK”.
Ms Campbell said “we can’t underestimate the pressure” housing associations were under, with cuts in development funding and the cost of complying with new regulation.
“We need to take a realistic view of what’s achievable by housing associations. At the same time as meeting all these standards, developing new homes and meeting net zero, we have to keep the rents affordable,” she said.
In November 2023, the Scottish government published proposals for a new social housing net-zero standard, which would force social landlords to replace fossil-fuel heating systems in their homes by 2045.
In addition, a Heat in Buildings Bill is expected to be included in Scotland’s programme for government this week, which will ban fossil-fuel heating in all homes by 2045 and bring in minimum efficiency standards for all homes by 2033 and private landlords by 2028.
The Scottish Housing Regulator has estimated that the cost of meeting the social housing net-zero standard could be £27,943 for a flat and up to £42,635 for a three-bed semi-detached house for buildings built after 1919.
With 315,000 social housing association properties in Scotland, the regulator says the cost could range from £4.6bn to £9.3bn.
It warned in January that to fund these higher estimates entirely from rents would require annual increases of between 42% and 80%.
Alternatively, to fund it solely through additional borrowing could lead to interest charges upwards of £1.3bn being added in the period to 2030.
At the event on Saturday, which focused on affordable warmth, Mr Allan also called for the UK government to introduce an energy tariff for social renters.
“I hope there is room for us to work with the UK government on that, because the very people who are least confident about looking for the best tariff for themselves are the very people who need to be on the best tariff, so we need to have an opt-out system,” he said.
