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Residential-Market-Commentary Residential-Market-Commentary

The importance of retrofitting a residential property and how to do it

Millie Todd • 27/07/2022

What is retrofitting 

Retrofitting is the process of making alterations to an existing property to improve its energy efficiency and reduce energy consumption. Retrofitting our homes will be vital if we are to meet current net-zero targets. 
Retrofitting Video Retrofitting Video

Meeting net zero

In June 2019, the UK became the world’s first major economy to pass laws committing it to achieving net zero by 2050. To realise this ambition, we need to address one of the biggest challenges we face: our homes. According to the Department for Business, Energy & Industrial Strategy, the UK’s homes currently account for around 20% of its CO2 emissions.1  Existing residential buildings pose a huge threat to our chances of achieving our net-zero ambitions. The London Energy Transformation Initiative External Link (LETI) estimate that 80% of the homes that will exist in 2050 have already been built. Retrofitting these properties - and addressing the inadequate energy efficiency of existing housing stock - is essential if the UK is to have any chance of hitting its net-zero targets. 

While Energy Performance Certificates alone are not a true indicator of energy efficiency, they have come to provide a consistent basis for measurement and are therefore referred to throughout this report. Effective from June 15th 2022, the latest version of SBEM (Simplified Building Energy Model) for England has been released by the Government to support the new building regulations for non-domestic buildings. This is the first time that these have been updated since 2013. The change to carbon intensity values to reflect the decarbonisation of the grid will have a ripple effect on predicted carbon emissions; and therefore EPC banding and EPC ratings. In summary, a building heated by natural gas is now likely to receive a poorer rating than previously, while an electrically heated building will receive a better rating.  

As things stand, 54% of homes in England have an energy performance certificate (EPC) rating in band D or below, compared to 60% in 2019-2020 and 86% in 2010. It is estimated that around 12 million of these homes could be retrofitted to band C or above, while the average cost of improving a dwelling with an EPC D, E, F or G to an EPC band C is £7,737, varying by current EPC band, tenure, age, property type, and so on. Retrofitting all 12 million of those homes would cost an estimated £94 billion (English Housing Survey). 

If we want to retrofit all properties to EPC C by 2050, we need to retrofit c1,170 homes a day. 


How to retrofit your home 


Insulation reduces heat loss in winter and excess heat retention in summer, lowering a property’s energy costs and carbon footprint. The Energy Savings Trust calculates that solid wall insulation alone, can save up to £650 and 1,500kg of CO2 per year for someone living in an average-sized detached property.  

Windows are estimated to be responsible for 18% of heat loss, with single glazing shedding heat twice as fast as double glazing. According to the Energy Savings Trust, installing A+ rated double glazing in a semi-detached, gas-heated property could save up to £175 and 410kg of CO2 per year. 

Renewable Technology 

Renewable energy sources such as photovoltaics (PV) and heat pumps can help homeowners meet their EPC requirements and make savings on their energy bills. PV for example, can help households save up to £385 a year, while a heat pump could cut households carbon emissions by more than 23 tonnes of CO2 over a 10 year span. 

The Passivhaus Trust External Link has highlighted that making a building airtight - by sealing gaps to reduce infiltration or uncontrolled ventilation - reduces heat loss, improves thermal comfort, and protects the fabric of the building.  

According to the Centre for Sustainable Energy External Link, ventilation systems can reduce energy costs by up to 25%. Unlike uncontrolled ventilation, they extract moisture, CO2, and bacteria, without leading to heat loss. 

Thermal Bridges 
Thermal bridges typically arise where there is a break in a property’s insulation, or in less well insulated areas. Thermal bridges allow heat to escape and - according to BRE External Link - can be responsible for up to 30% of heat loss from a residential property. 


The wider benefits


Living standards 

Retrofitting can not only improve the energy efficiency of the UK’s homes, it can also help raise living standards. Around 11% of UK households are currently living in poor housing conditions and face issues like draughts, damp, mould and poor ventilation. Analysis by Building Research Establishment External Link suggests that excess cold in homes costs the NHS £857 million a year, and dampness an additional £38 million. Retrofitting homes will help address these issues, improving housing conditions, boosting residents’ health and wellbeing, and saving the NHS money.  

Fuel poverty 

According to figures from the Department for Business, Energy & Industrial Strategy, there were 3.16 million UK households living in fuel poverty in 2020. This figure will only increase as energy costs continue to rise. The English Housing Survey estimated that the average annual fuel-cost saving from improving dwellings to an EPC band C was £282. With the 2022 energy price cap rises, we may see this figure increase.  


Retrofitting our homes will boost the UK economy and provide jobs. The Construction Leadership Council suggests that a retrofit programme could create 500,000 new jobs by 2030 and add £309 billion to the UK economy. 

Retrofitting will also help protect the value of our assets. If homes don’t keep up with sustainability regulations, they will become unattractive to buyers. In June 2022, the NatWest Greener Homes Attitude Tracker External Link reported that a property’s EPC rating was a very important factor for 39% of buyers in Q2 2022, up from 36% in Q1 2022 and 33% in Q4 2021. 


How willing are we? 

Private rented sector 

Government regulations will help encourage retrofitting. So far, these have focused on the private rented sector, where Minimum Energy Efficiency Standards (MEES) have been introduced requiring private rented properties to have a minimum rating of EPC band E. The government has proposed increasing this MEES requirement to EPC C or above by 2025 for new tenancies, and by 2028 for all tenancies.  

Owner occupier
Enforcing sustainability regulations in the owner-occupier market is more complicated. Costs represent the biggest barrier to green home improvements, suggesting that financial incentives are the way forward. Measures that mitigate the rising cost of energy bills could entice homeowners. Further encouragement could come through government-backed schemes such as the Boiler Upgrade Scheme. Green mortgage lending can also help to incentivise buyers, with some banks offering better interest rates or cashback on mortgages.  

Social housing 
Retrofitting social housing will be a huge challenge for local authorities and housing associations. The Social Housing Regulation Bill is intended to improve the quality of social homes, but we are still awaiting further details around strategy and funding. With more than one million households waiting for social housing, it is hard to see how retrofitting will be the main priority. 

The future 

Retrofitting our homes is clearly essential if we are to meet our net zero targets. Owners’ willingness is not the only challenge. We need to ensure that the UK’s infrastructure can cope with the changes we are making. We need to have the workforce in place, not only to retrofit our homes, but also to maintain and service the changes made. Beyond that, we need to ensure that energy-efficient homes are within reach of all households if we want to avoid further polarisation of the housing market. 

1 Emissions from residential properties, including from consumer product use, primarily consisting of fuel combustion for heating, cooking and garden machinery, as well as fluorinated gases released from aerosols and metered dose inhalers.

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