Case Study
Leeds has successfully delivered ‘whole neighbourhood’ retrofit programmes in various locations across the city, with a focus on areas in energy poverty. These have been primarily achieved through a mix of different central government grant funds – an approach which doesn’t easily scale.
In addition, currently there is a lack of coherent central government provided support to middle income owner-occupiers seeking to retrofit their properties, and, even where support does exist it’s hard to blend across a mix of tenures, which makes neighbourhood initiatives challenging. Through their Better Homes Leeds programme, Leeds City Council are creating an approach which tackles multiple barriers to help deliver the scale of retrofit required.on.
Challenge – complex, mixed-tenure and typology neighbourhood scale retrofit
Leeds has set a net zero target date of 2030 and, in common with many local authorities, housing accounts for a large share (27%) of emissions. Leeds has approximately 360,000 homes of which around 55,000 are council-owned. The housing stock is varied, with around 80,000 inefficient Victorian era homes where cavity wall insulation is not an option – as well as 115 tower blocks. Most neighbourhoods are mixed tenure – with owner-occupiers and rentals (social housing and private) frequently mingled together.
In 2016-2018 with funding from the Local Growth Fund, ECO, Housing Revenue Account and direct council investment, Leeds City Council (LCC) rolled out a comprehensive £4.5million retrofit programme of 180 properties in Holbeck. With 70% private rental, 20% council owned and 10% owner-occupier, the success of the scheme relied on in-depth engagement with tenants and careful management. Landlords paid 25% of the costs of renovation and residents 0-25% depending on their income. The approach was so successful that when LCC announced phase 2, 90% of properties had signed up within a month, ultimately improving another 150 properties.
But translating this success to all homes in Leeds would cost approximately £5.4bn – not something the public purse can afford. Private financing is needed – but for many owner occupiers, the cost of improvements wouldn’t ‘pay for themselves’ through energy savings – at least not until after people would typically have moved to another property and so they lack the incentive to invest.
Solution – multi-strand intervention including novel private financing approach
LCC are developing an approach to neighbourhood-scale mixed-tenure retrofit which seeks to overcome multiple barriers. Working with Arup and other partners
including Lloyds Bank and Octopus Energy, with funding from the partners plus the West Yorkshire Combined Authority, MCS Charitable Foundation and the Green Home Finance Accelerator, LCC have developed a model (‘Better Homes Leeds; BHL’) which:
· Evaluates the appropriate interventions for particular housing archetypes (eg solid brick terraces with gas boilers in a conservation area or turn-of-century houses with a gas boiler).
· Creates an easy to use ‘one stop shop’ to enable householders to access the right advice, suppliers and financing.
· Will be tested, iterated and improved through the duration of the programme.
· Will develop a new financing method to support owner-occupier retrofit.
Diagram title – LBH Draft Financial and Operating Model – Arup
The partners are now working to finesse this model and considering establishing the delivery structures. In parallel with this model, LCC are also creating a green
skills plan to ensure the right capabilities are available locally to meet the demand for retrofit.
In Holbeck, LCC were able to deliver retrofit improvements across the whole mixed tenure neighbourhood by using a phased approach. They first delivered improvements to 40 council houses. This kick-started positive word of mouth. They declared the neighbourhood a selective licencing area, giving them jurisdiction to inspect rental properties and identify priority improvements, while also dealing with legacy repair issues. Finally, the council used a disused building in the community as a site office, and as a regular point of contact with the community. This comprehensive approach, with a visual presence in the neighbourhood, won the trust of the community over time, leading to over 95% take up rates.
Better Homes Leeds will also pioneer the development of a new (to the UK) form of financing called ‘property linked financing’. This is a form of loan which is attached to a property rather than an individual. This means that repayment obligations transfer to a new owner once a property is sold. This approach overcomes the ‘payback period’ barrier for owner occupiers and because it is a low-risk, long term form of financing, it can be provided at relatively low interest rates. At present, this sort of financial instrument is not available in the UK, but LCC are working with the Green Finance Institute and others to develop it – along with the associated legal provisions.
This new financing approach, combined with the experience LCC acquired through the Holbeck work will provide the council with a firm foundation for scaling up their neighbourhood retrofit approach across the city.
Impact – emissions reduction, energy savings and social cohesion
Working at a neighbourhood level is financially more efficient, has the potential to increase emissions reduction through looking holistically at an area and also has knock-on benefits of improved social cohesion. George Munson, Senior Project Manager in the Climate, Energy and Green Spaces (CEGS) team at Leeds City Council observes that “the value is not just in the efficiencies of working at scale, but also in addressing the multiple social challenges that local people face. This broad approach can be transformative and long lasting.”
One mother of four described the difficulties she had keeping her home warm prior to the work. Now her children have an affordably warm home where they have private spaces to do their homework, rather than living in the one warm room in the house.
By introducing a property-linked finance component, LCC will be able to more easily finance neighbourhood scale retrofit programmes through making schemes more financially viable for owner-occupiers.
What next? – surveying to create city wide solution prioritisation
Better Homes Leeds and a shadow property-linked finance offer should be up and running by March 2024.
In the meantime, Leeds is conducting a thorough survey to ‘zone’ the whole city. This will draw on a range of characteristics (tenure, building typology, suitability for solar PV) and integrated with existing heat-network viability mapping in order to target and shape future neighbourhood retrofit activity.
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