Warm Homes: Local Grant for Landlords Explained

In September 2024, the UK Government introduced the Warm Homes: Local Grant, a scheme aimed at improving energy efficiency in homes across England, focusing on reducing fuel poverty and supporting the transition to net zero. This grant is part of the government's Warm Homes Plan, which aims to upgrade five million homes within the next five years. It also plays a role in the government’s goal of having all rented homes achieve Energy Performance Certificate (EPC) Band C or equivalent by 2030.

Overview of the Warm Homes: Local Grant

The Warm Homes: Local Grant provides funding for energy efficiency upgrades and low-carbon heating installations for low-income households. It covers properties in the private rented sector (PRS)and owner-occupied homes to improve living conditions for tenants while reducing their energy costs. This initiative builds on previous schemes such as the Local Authority Delivery (LAD) and Home Upgrade Grant (HUG).

Key Objectives:

1. To reduce fuel poverty by upgrading the energy performance of low-income homes to EPC Band C by 2030.
2. To contribute towards the UK’s Net Zero 2050 target by cutting carbon emissions through energy efficiency measures and low-carbon heating.

Eligibility for Private Rented Sector Properties

Under the Warm Homes: Local Grant, landlords can access funding to improve properties where tenants meet the income eligibility criteria. The scheme offers full funding for energy efficiency upgrades on one property per landlord. For any additional properties, landlords must provide a 50% contribution towards the cost of improvements.

Key eligibility points include:

• Tenant Income: The tenant must meet certain income thresholds, such as earning below £36,000 annually or receiving a means-tested benefit.
• Property Requirements: The property must have an EPC rating of D, E, F, or G. Properties already rated A-C are not eligible. Properties rated F and G must have registered exemptions under the Energy Efficiency (Private Rented Property) Regulations 2015 to be eligible.

Landlords will need to declare that they do not intend to raise rents as a direct result of any upgrades funded by the scheme. A central database will be maintained to track the number of fully funded properties each landlord has upgraded.

Types of Upgrades Covered

The Warm Homes: Local Grant allows for two main types of upgrades:

Energy Performance Upgrades: Up to £15,000 per property can improve energy performance through measures such as insulation, draughtproofing, and double glazing. These improvements aim to increase the property's EPC rating, with the target being to achieve Band C where possible.

Low-Carbon Heating: An additional £15,000 is available for installing low-carbon heating systems, such as heat pumps and solar thermal systems. These systems are encouraged in homes that are not connected to the gas grid and are heated by more carbon-intensive fuels like oil or coal.

Both cost caps—£15,000 for energy performance measures and £15,000 for low-carbon heating—can be averaged across a project but must be met by the end of the project.

Cost Contribution and Financial Limits

For private landlords, the scheme fully funds the first property under the Warm Homes: Local Grant. For any additional properties, a 50% cost contribution from the landlord is required. This applies to both energy efficiency and low-carbon heating upgrades.

No restrictions exist on how many properties a landlord can upgrade, but financial limits apply. Under the Subsidy Control Act 2022, landlords cannot receive more than £315,000 in total subsidy, including funding from this scheme and any previous grants or subsidies within the past two financial years. Local authorities are responsible for ensuring that landlords remain within these limits.

Timelines and Scheme Duration

The Warm Homes: Local Grant will open for delivery on 1st April 2025 and is expected to run for 3-5 years. The government will announce more details on funding availability following the completion of the Spending Review.

Future Energy Efficiency Standards and EPC Reform

The government's announcement on 23 September 2024 also signalled future changes to energy efficiency standards for rented homes. A consultation will begin on proposals for private and social rented homes to achieve EPC Band C by 2030. This will involve over one million households, aiming to lift them out of fuel poverty. Additionally, the government plans to consult on improvements to the Energy Performance Certificate (EPC) system, aiming to make EPCs more accurate and reliable. This follows long-standing concerns about the accuracy of EPC assessments, which are often seen as inconsistent.

At the Labour Party conference in September 2024, Ed Miliband highlighted the need to address the poor quality of many rented homes, stating that too many tenants live in “cold, drafty homes” that fall below decent standards. While he did not specifically mention EPC Band C, his speech underlined the political commitment to improving the condition of rental housing, particularly for low-income households.

Conclusion

The Warm Homes: Local Grant provides landlords with a structured way to improve the energy efficiency of their rental properties, particularly for tenants at risk of fuel poverty. By covering the cost of upgrades for one property and offering partial funding for additional homes, the scheme seeks to increase participation in energy efficiency improvements within the private rented sector.

For more information and updates on the Warm Homes: Local Grant, visit the UK Government’s Warm Homes policy guidance page.