A hot topic

CLA Property and Business Adviser Hermione Warmington discusses the key proposals for off-gas grid homes and buildings in the government’s Heat and Buildings Strategy

Heating our homes and buildings accounts for one-third of all UK greenhouse gas emissions, which need to be almost eliminated to meet the government’s 2050 net zero target. Earlier this week (19 October), the government published its long-awaited Heat and Buildings Strategy, which sets out how the government plans to significantly cut emissions from the UK’s 30 million homes and buildings.

The strategy is primarily a roadmap for heat policy, focusing on how the UK can transition away from fossil fuel heating, which currently heats 90% of our homes, towards low-carbon heating, but also covers building efficiency, the potential future demand for cooling, and fuel poverty.

The strategy is over 200 pages long, so this analysis only touches the surface but highlights the key proposals for off-gas grid homes and buildings. More information will be included in a CLA members briefing note, which will be published shortly.

Off-gas grid homes and buildings

For off-gas grid homes and buildings, the strategy sees heat pumps playing a pivotal role in decarbonising heat but recognises that other technologies, such as bioenergy or storage heaters could be viable alternatives in limited circumstances. Analysis by the Department for Business, Energy and Industrial Strategy (BEIS) suggests that 80% of fossil fuel heated off-gas grid homes in England will be suitable for a heat pump without the need to improve their energy efficiency or increase their electrical supply.

Off-gas grid homes and buildings heated by oil may be required to transition to low-carbon heating up to nine years before homes and buildings that are heated by mains-gas. Alongside the Heat and Building Strategy, BEIS also published two consultations, which propose to phase out the installation of oil boilers in large commercial buildings (>1,000sqm) from 2024 and homes and other commercial buildings from 2026, as well as adopting a ‘heat pump first’ approach.

Funding

To incentivise the early uptake of heat pumps in homes, the government has announced a Boiler Upgrade Scheme, which will open from April 2022, replacing the existing Renewable Heat Incentive scheme, which comes to an end in March 2022. The Boiler Upgrade Scheme will offer £5,000 to replace a fossil fuel boiler with an air source heat pump and £6,000 for a ground source heat pump. The fund is worth £450m and is expected to install 90,000 heat pumps over three years.

In addition to the Boiler Upgrade Scheme, the strategy confirms previously announced grant funding, including the Homes Upgrade Grant, ECO, Social Housing Decarbonisation Fund, and the Public Sector Decarbonisation Scheme, totalling £3.9bn.

Regulation

Privately rented homes and buildings

Last year, the government consulted on increasing the minimum EPC rating for let homes to band C for new tenancies from 2025 and existing tenancies from 2028. The government’s response is expected before the end of the year.

The government previously confirmed that the minimum EPC rating for let non-domestic buildings would increase to band B by 2030, but the strategy also confirms an interim milestone of a minimum rating of band C by 2027.

Owner-occupied homes and buildings

The strategy identifies three potential trigger points for owner-occupied homes to meet a minimum EPC rating: property sales, property financing and repairs and improvements. The government is still consulting with stakeholders, of which the CLA is one, on this.

The government will consult later this year on owner-occupied non-domestic buildings.

The CLA’s view

Decarbonising our buildings is undoubtedly a huge challenge, and it seems as though rural off-gas grid homes and buildings carry the additional burden of being one of the first sectors to be required to move to low-carbon heating.

Rural homes and buildings must be adequately supported in this transition, primarily through funding but also through expert advice.

Rural homes are often the most difficult to decarbonise, and it is vital that the sector can deliver the scale, skill level and efficiency that is needed.

The Boiler Upgrade Scheme is a promising start, but we would like to see funding targeted at off-gas grid homes in recognition that their heating type is set to be phased out almost a decade earlier than their urban counterparts.

Heat pumps take centre stage in the strategy, but in rural areas heat pumps are not always suitable. Rural landlords and homeowners must have the flexibility to install the heating type that is best suited and most effective for their home, which may include biomass or biofuel.

We were disappointed to see that the strategy did not contain more on Energy Performance Certificates. The CLA has long been lobbying for a fundamental reform of EPCs so that they are accurate for older buildings and recommend cost-effective, safe improvement measures. This is even more important, given that in the coming years, they will be used to regulate not only the private sector but also the social and owner-occupied sectors.

Key contact:

Hermione Warmington
Hermione Warmington Policy Advisor, Property and Business