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What is the Social Housing Decarbonisation Fund? 

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In the UK, all social housing must meet certain levels of economic and consumer standards, which the UK government has set out.

In 2019, the UK government committed to the Social Housing Decarbonisation Fund (SHDF). They proposed making £3.8 billion available over a 10-year period, aiming to help decarbonise a significant amount of social housing stock held within the UK.

The fund is there to be used to improve measures such as ground source heat pumps, which will, in turn, help tackle fuel poverty. The fund is also there to help reduce emissions and increase energy efficiency within social housing homes.

Yield Investing works closely with a UK social housing provider to ensure these standards are met before we tenant or advertise the homes for investment. 

When you invest in a social housing property, you can be assured that Yield Investing has met all the regulatory standards set by the UK government. These must be met on all social housing properties.

How does the Social Housing Decarbonisation Fund work?

The Social Housing Decarbonisation Fund was released in waves staggered over ten years. This strategic approach allows for the progressive enhancement of social housing energy efficiency. Each wave addresses specific needs and requirements, ensuring the fund’s benefits reach various social housing properties.

Wave 1

The Social Housing Decarbonisation Fund Wave 1 awarded £179m of the available funding to 69 projects across the UK. This funding for social housing had to be used within the 2021/2022 financial year to improve the energy performance of 20,000 homes across the UK.

Wave 2.1 and 2.2

SHDF Wave 2.1 was opened at the end of September 2022 and closed in November 2022, with bid assessments ending in December 2022. Successful projects are now in the process of being granted funding. 

It was previously stated that there would be no further funding in 2025. However, it has been announced that £80 million worth of funding is now available in SHDF wave 2.2.

Wave 3.0

In the Autumn Statement delivered by Jeremy Hunt, he revealed the plans for wave 3. It was announced and confirmed by The Energy Security and Net Zero department on 23 December 2023 that an additional £1.25 Billion has been pledged to the Social Decarbonisation Fund.

The additional social housing funding will support up to 140,000 homes and help social landlords and providers plan to invest further in the insulation and retrofits of their properties, improving energy performance and lowering bills. This will help address the fuelling poverty issues within the social housing sector in the UK.

The announcement that the total SHDF funding will be released up to 2025 was a massive relief for housing associations and councils. It has enabled them to plan to invest further in the retrofitting of their properties and contract larger projects that will create thousands of skilled jobs across the UK, which will lead to boosting the economy and supply habitable homes for millions. This, in turn, will help residents with the fuel poverty crisis and enable them to live in affordable, warm homes.

Further measures include £ 1.5 billion for the UK government’s boiler upgrade scheme, which helps people install heat pumps. The funding aims to make the shift to low-carbon heating systems more affordable for homeowners, improving the energy performance of social homes in England. 

How to Apply for the Social Housing Decarbonisation Fund 

To apply for the UK Social Housing Decarbonisation Fund Wave 2.2, eligible organisations can submit their applications via the Application Portal by 31 January 2024. The fund targets upgrades in social housing to improve energy performance and is open to local authorities, registered social housing providers, and registered charities that own social housing. Applications can be individual or as part of a consortium.

The properties eligible for this fund are existing social housing properties rated below Energy Performance Certificate (EPC) band C. There’s a minimum requirement of including 100 eligible properties per bid, although exceptions can be made with solid justification for fewer properties.

Applicants are required to match the government grant funding with their funds, ensuring delivery by March 2026. The fund aims to reduce fuel poverty, lower carbon emissions, and support tenants by making homes warmer and more energy-efficient. It also seeks to develop the retrofit sector and support green jobs.

Applicants must demonstrate their ability to assemble a strong delivery team, identify suitable properties, procure necessary skills and materials, measure baseline performance, design and implement effective retrofits, oversee project delivery, and coordinate all these elements effectively.

The application process is divided into scoring sections: strategic fit, delivery assurance, and value for money. The project should not increase tenants’ energy bills and must comply with the latest PAS standards. 

For those looking to bid for their social housing properties, the Social Housing Retrofit Accelerator (SHRA) is a fully-funded service in England. It helps registered social housing providers across England bid for the Social Housing Decarbonisation Fund (SHDF). The SHRA offers various support, like technical advice and bid management and is funded by The Department for Energy Security and Net Zero

The Future of the Social Housing Decarbonisation Fund

To decarbonise all existing social housing homes, another £36 Billion will be needed up to 2050

In 2025, an energy efficiency grant will launch, which will help UK residents pay for larger radiators and better insulation. This is all assisting the UK in working towards its net zero target, which is to reduce all greenhouse gas emissions to net zero by the year 2050.

Not only that, but a new local authority retrofit scheme was also announced. This scheme will be allocated £500million, which will support 60,000 million low-income and cold homes with insulation and other measures to ensure they are warm and cost-effective.

Many social housing associations and providers are already improving energy efficiency. Their homes are some of the most energy-efficient in the country. However, there’s still a long way to go, and the social housing sector is keen to remain at the forefront.

How do Social Housing Associations use the Social Decarbonisation Fund? 

The commitment of housing associations to retrofitting properties currently below energy performance certificate targets is not just to provide energy efficiency and comfortable homes that are affordable for the residents to run. Still, it is essential if the UK plans to meet the Net Zero targets

Housing associations nationwide plan to invest £70 Billion by 2050 in their residents’ social homes. This money will go towards fabric, heating systems and other components that will make the homes energy efficient.

The partnerships between housing associations, local councils, and authorities lead the retrofit of the UK’s social housing homes. However, it’s very costly work for the social housing sector.

The SHDF encourages collaboration between housing associations, local authorities, and other local stakeholders, as well as collaboration between the UK government and the social housing sector.

The fund has provided the support that the housing associations have needed as they decarbonise the social homes across the UK. It has also created jobs within the local communities and is helping to address the fuel poverty issue in the UK. With ever-rising energy prices, this is a positive step in the right direction.

How Investing in the UK Social Housing Sector Helps Economically

Having a warm, comfortable home is a fundamental human right. But it also creates economic growth opportunities by creating jobs and nurturing communities.

Affordable housing investments like social housing investments help unlock economic growth, and investments, funding and grants from the UK Government create further growth in the UK economy.

It isn’t just about developing or revamping properties. Investment in construction and the development of the projects creates jobs in the construction and labour sectors of the economy, and it also creates a demand for materials, further boosting the construction sector.

Social housing providers are leading the way in producing energy-efficient housing stock, creating new job opportunities for the green business sector. The demand for this is huge, as seen by the current social housing waitlists.

Affordable and social housing also impacts the surrounding economy. Goods and services will generally be sourced locally, and community support will be extended to the local agencies, such as Citizens’ Advice and Job Centres, which will establish a relationship between the housing associations and the local community, which feeds into replenishing the economy.

Social housing is a stable income for investors, the authorities and the UK Government. It also gives investors the opportunity for ethical investment, which helps other people build their futures.

Invest in Social Housing with Yield Investing  

Social housing, providing warm and energy-efficient homes for people within the UK and achieving Net Zero are huge priorities for the UK Government.

Funding for social housing has been pledged, and more has been committed to providing people with the required standard of homes.

Local authorities and housing associations are paving the way for retrofitting existing homes. The SHDF scheme will make a massive difference in supporting registered providers of social housing in making homes energy-efficient, and it will also unleash a significant amount of investment opportunities.

Yield Investment is fortunate enough to work alongside a UK housing provider supported by the local authorities. This means we supply energy-efficient homes to people who need them most and ensure they meet all the required regulatory standards. 

When you invest in supported living properties in the UK, you gain a promising opportunity with the potential for attractive financial returns and ethical property investment that significantly impacts communities. You can be assured that these properties are retrofitted to the standards outlined by the UK government.

Supported Living caters to vulnerable individuals, providing them with a safe, energy-efficient home and offering investors a chance to contribute to this noble cause.

Investing in supported living is not just about financial gain; it’s about positively impacting society. We encourage you to explore your options, seek professional advice, and consider the tremendous potential of investing in supported living properties in the UK. Contact Yield Investing today for additional information and resources. Together, we can make a difference in the lives of vulnerable individuals while securing your financial future.

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