Green Homes Grant Scheme Scrapped One Year Early

The Government has scrapped the Green Homes Grant, a voucher scheme it was hoped would transform energy efficiency in the private rental sector and result in billions of pounds worth of green home improvements in England.

The Green Homes Grant, launched by Chancellor Rishi Sunak last September, was aimed at draught-proofing and installing efficient heating systems in homes that account for a fifth of total carbon dioxide emissions, while at the same time supporting more ‘green jobs’. The scheme had been described as the ‘centrepiece of Boris Johnson’s promise to “build back better” from the Covid-19 pandemic’.

The grant enabled home owners in England to claim a discount of up to £5,000 off the installation fees for an electric heat pump or insulation, while low-income households could claim up to £10,000. Landlords were required to redeem a voucher and ensure improvements were completed by 31 March 2022.

The scheme would have funded two-thirds of the cost of eco-related home improvements up to £5,00 or £10,000. The original grant attracted more than 123,000 applications by the end of February, but only 28,000 vouchers were dispatched and just 5,800 energy efficiency measures have been installed.

Demise of green homes scheme condemned

Although lauded for its aims, the green homes scheme received criticism from many quarters. Arla Propertymark, in particular, denounced the Government for failing to extend the scheme beyond England and provide sufficient funding. Following initial problems, the cut-off point for applications had been extended by one year to March 2022, only for the original deadline to be reimposed. Just 10pc of the 600,000 homes Mr Sunak promised would be improved received any benefits.

On 27 March 2021, the Department of Business, Energy and Industrial Strategy announced that, following a review, the Green Homes Grant Voucher Scheme launched last year would close to new applications on 31 March at 5pm. The notice added that the scheme was designed to provide a short-term economic boost as part of the UK’s contribution to climate change. Applications received before the March deadline would be honoured and any vouchers already issued would be extended on request.

No information was provided by the Government concerning alternative incentives for home owners and landlords to make their properties more energy-efficient. However, on 30 March, an announcement was made that, in order to help cut emissions, additional funding of £300m would be assigned to green home upgrades for lower-income households.

Hammer blow to PRS

Brian Berry, CEO of the Federation of Master Builders (FMB), commented that the’misguided’ scrapping of the Green Homes Grant scheme not only sends completely the wrong message to builders and consumers, but will damage the UK’s desire to be seen as a global leader in tackling climate change.

Defects in the scheme, he said, should have been addressed in consultation with the industry, along with a commitment to training. Instead, this is another example of a stop-go green intiative that undermines rather than creates certainty for both the public and installers.

The Government needs to be more ambitious and develop a long-term strategy to upgrade our existing homes to make them greener and more energy-efficient. A national retrofit plan would fit the bill and allow the Government to be taken seriously and regain the trust of industry, he said.

Small local builders, he added, feel let down and angry after spending thousands of pounds to become eligible for the scheme. If these tradesmen have no trust in the Government, we will fail to retrofit our 28m existing homes and miss opportunities for green growth, new jobs and levelling up.

Scrapping the green homes grant scheme represents a hammer blow to the rental sector. Currently, every rental property is legally required to have an Energy Performance Certificate (EPC) rating of E or higher which must be shown to prospective tenants. The Government had stated its intention to raise the minimum rating from E to C for new tenancies from 2025, but the recent announcement suggests this is no longer a priority.

In evidence, the Environment Audit Committee heard that upgrading the properties currently operating below the EPC C band would cost around £18,000 per home, a huge underestimate on the part of the Government.