CIH welcomes DESNZ’s changes to Social Housing Decarbonisation Fund wave three

The Chartered Institute of Housing has welcomed changes to Wave 3 of the Social Housing Decarbonisation Fund, stating that they should make delivery of energy efficiency improvements easier.

On Monday, the Department for Energy Security and Net Zero (DESNZ) released draft guidance for Wave 3 of the SHDF, which the CIH said included “some significant positive adjustments”.

These include the introduction of new low-carbon heating incentives for homes on the gas grid and the implementation of strategic partnership application pathways for organisations with a track record of retrofitting at scale.

Matthew Scott, policy and practice officer at the Chartered Institute of Housing, said: “The publication of the draft specification and timeline is very welcome and contains some significant positive adjustments from previous waves. The new low-carbon heating incentive, creation of a strategic partnerships route, and added flexibility for smaller housing providers shows that DESNZ has taken on board feedback from the sector and should improve delivery over the coming years.”

>> See also: Latest Social Housing Decarbonisation Fund allocations announced

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In December, the government announced that it would allocate £1.25bn to wave 3 of the SHDF. The delivery period for SHDF Wave 3 will run until 30 September 2028.

However, all grant funding allocated for projects under wave 3 must be transferred to the grant recipient and spent by 31 March 2028, meaning projects can only use co-funding in the final six months of delivery.

For this wave of funding, there is a standard £7,500 cost cap for grant funding per home, which is consistent across all homes and does not vary based on the starting Energy Performance Certificate (EPC) band or wall type, as was the case in Wave 2.

In addition, up to 10% of homes in an application can access a grant fund of £20,000 per home to install low-carbon heating measures if they are on the gas grid, while homes off the gas grid are subject to the £7,500 cost cap.

In earlier waves of the SHDF, homes that were already at or above EPC band C could only be included in applications on an infill basis.

However, in Wave 3, homes at or above EPC band C can now be included in applications where low-carbon heating measures are being installed. The inclusion of these homes is limited to a maximum of 10% of the total homes within an application.

Small registered providers who own or manage fewer than 1000 homes can apply for funding for fewer than 100 homes. For these landlords, there is no minimum application size.

However, the draft document says “We expect such landlords to try to reach 100 homes, or to join a consortium where this is not possible”.

Mixed tenure blocks can now be considered as a whole for SHDF applications if they contain at least 30% social homes within the block or terrace. This represents a reduction from the previous requirement of 50% social homes in Wave 2.