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Retro futures: Is the path to net-zero lined with retrofitted buildings?

Words: Matt Moody

Momentum is growing in favour of nationwide policies and funding to support retrofitting buildings to meet net-zero goals. But, despite a strong case, government is dragging its heels, finds Matt Moody

“The greenest building is the one that is already built.” That’s the ethos – embodied by a phrase coined by the US architect Carl Elefante in 2007 – that has come to represent a growing movement seeking to drive down carbon emissions by retrofitting existing buildings instead of replacing them.

RetroFirst, a campaign founded by the Architects’ Journal, has been steadily gathering support since it was announced in 2019. In early 2021, architects Thomas Heatherwick and Norman Foster, along with Grand Designs presenter Kevin McCloud, joined a list of 35 built environment heavyweights calling on the government to adopt the campaign’s three demands for prioritising and supporting retrofitting works: reforms to tax, policy, and procurement.

"How can the planning system be changed to enable – rather than inhibit – the retrofit revolution?"

Two of these three demands are relatively simple: the first calls for an end to VAT policy that requires more tax to be paid on retrofit work than demolition (see below 'The case for VAT change); the second, for all publicly funded construction projects to look to retrofit solutions first. But the third, however, is more complicated, calling for changes to planning policy and building regulations. It poses what is likely to become an increasingly important question: how can the planning system be changed to enable – rather than inhibit – the retrofit revolution?

Policy changes

One organisation leading the way on retrofit is Grosvenor, the international property group that traces its origins to 1677. At the end of 2020, the group committed £90 million to retrofitting its grand London estate in Mayfair and Belgravia – which contains 500 listed buildings – as part of its plan to achieve net-zero carbon emissions by 2030.

In June, Grosvenor produced a report arguing that “historic buildings can play a leading role in the fight against climate change”. To do that, however, there are issues that need to be addressed – chiefly, planning policy. “If you don’t get the high-level policy right for heritage adaption and energy efficiency, then I think it’s very difficult for everything else to fall into place,” says Tor Burrows, executive director of sustainability and innovation at Grosvenor. “At the moment, the policy hierarchy for this is really difficult to make sense of – it’s complicated and inconsistent, and it doesn’t make it easy for developers and homeowners to retrofit historic properties.”

“If you don’t get the high-level policy right for heritage adaption and energy efficiency, then I think it’s very difficult for everything else to fall into place"

Heritage & Carbon, the report by Grosvenor, states: “The ambiguity and inconsistency of planning policy and guidance regarding energy efficiency in historic buildings has left a substantial amount of England’s existing building stock vulnerable to the impending climate crisis.”

It proposes changes to chapter 14 of the NPPF that would create “a much stronger direct link” between heritage and sustainability, as well as the addition of policies seeking carbon reduction in all existing buildings, including designated heritage assets (but not scheduled ancient monuments). The report also calls on the government to promote the use of listed building heritage partnership agreements. HPAs – agreements between building owners and local authorities that allow the latter to grant blanket consent for routine alteration works to repetitively designed buildings or groups of buildings – save time and money, but despite being introduced in 2013, they remain “vastly underutilised”.

The Architects’ Journal campaign floats changes to national planning policy, too, including a “presumption in favour of refurbishment” as a subset of the existing presumption in favour of sustainable development under NPPF paragraph 11, and the scaling back of permitted development rights that allow demolition works without permission.

From all corners, there are calls for leadership from central government on retrofit. The UK Green Building Council (UKGBC) has “joined calls from the across the industry, championed by the likes of the Construction Industry Council and Federation of Master Builders, to campaign for a national retrofit strategy” to “provide much-needed business certainty following the damage of several stop-start policy cycles and deliver a long-term plan for achieving net-zero and securing associated green jobs”.

What does retrofitting involve?

Grosvenor’s Heritage & Carbon report points out that, at a global level, about 40 per cent of carbon comes from the built environment. Half of this comes from operational use (residential and commercial). This is “even more marked” in London, where the figure is an astonishing 78 per cent. The report observes that “roughly 80 per cent of buildings that exist today will do so in 2050 and so to achieve a net-zero position, it is clear that tackling existing stock is essential”.

Within its London portfolio, which contains some 500 listed buildings, Grosvenor’s work has focused on installing better insulation, replacing gas boilers with electric heat pumps, and more energy-efficient lighting.

Cornwall’s ‘whole house retrofit’ scheme addresses regular housing stock and identifies 10 areas where additions or refurbishments can improve carbon performance. The £4.2 million ‘whole house retrofit’, funded partly by government, seeks to improve 83 of the worst-performing houses by:

  • Decommissioning chimneys
  • Loft insulation
  • Solar panels
  • New hot water tank
  • Insulation to external walls
  • Ground-floor insulation
  • Ground source heating
  • Temperature controls
  • Double glazing
  • Single-room ventilation and heat recovery

Local efforts

The alternative to clear central leadership is confusion and inconsistency, says Russell Smith, founder of RetrofitWorks, a not-for-profit cooperative that connects people or groups that want to undertake retrofit projects with expert tradespeople who can carry out the work.

Retrofit policy differs from council area to council area, and decisions are made on a case-by-case basis. This adds more confusion for householders who already need to think about which technology is the best choice, which contractors will be able to do the work, and which government grants they might be eligible for, he says. Add to that the fact that budget cuts have forced many councils to charge for pre-application advice, and the result is that “often people just don’t go ahead” with retrofit works that would have shrunk their carbon footprint.

Despite these challenges, local authorities around the country are working to make retrofitting easier for residents. One example is Cornwall Council, which has undertaken a £4.2 million pilot scheme to make 83 of its poorest-performing homes warmer and greener. Its ‘whole house retrofit innovation’ scheme (WHRI) works by carrying out numerous improvement works to a property at the same time – an approach that lowers costs through economies of scale.

“To achieve a net-zero position, it is clear that tackling existing stock is essential”

The whole house retrofit model has been designed to be replicable, so that it can be deployed in other communities with similar housing stock across the UK. Cornwall Council was one of three authorities that won £7.7 million of funding from the Department for Business, Energy & Industrial Strategy to pursue whole house retrofit pilot schemes in 2020, along with Nottingham City Council and Sutton Borough Council.

The UKGBC has also been working to propagate retrofit expertise among local authorities. Through its ‘Accelerator Cities’ project to “catalyse action on home retrofit”, the organisation has created a ‘retrofit playbook’ that aims to aid councils in “developing retrofit policies and initiatives, through sharing best practice and guidance”. It offers tips on designing an overarching retrofit strategy, engaging householders and landlords, financing, and developing skills and supply chains.

Central government is still lagging behind, however, even as the fast-approaching COP26 means its climate change policy is under more scrutiny than ever before. In March, its flagship retrofit scheme, the Green Homes Grant, was scrapped just six months after it was announced. The scheme, which offered grants of up to £10,000 to pay for insulation upgrades and other efficiency measures, was intended to secure improvements to 600,000 homes, but only £71 million of the £1.5 billion that had been made available was spent. The government further angered campaigners by scrapping it shortly after the 2021 budget, having missed the opportunity to announce a new programme.

In August, however, business secretary Kwasi Kwarteng indicated that the government was in talks to introduce a replacement for the Green Homes Grant. Its next opportunity to do so is through the highly anticipated Heat and Buildings Strategy, which is expected this autumn after repeated delays.

Whether or not the government chooses to lead on retrofitting, it seems that councils, developers and professional bodies across the country will continue working to make Britain’s homes greener, but within a policy context that does not necessarily make it the easiest or most cost-effective path to creating buildings that are future-proofed. 

The case for VAT change

One of the most frustrating aspects of national policy for retrofitting advocates is the rate of value-added tax (VAT) it attracts. Since the tax was introduced in the 1970s, demolition and new building work have been exempt. Retrofit and repair work, on the other hand, falls under the standard rate, which has since risen, most recently to 20 per cent in 2011. The result is a discrepancy that financially incentivises the demolition and replacement of existing buildings that could have been made more efficient through retrofit work.

The Architects’ Journal RetroFirst campaign calls for VAT on retrofitting to be lowered to 5 per cent, in line with other existing exceptions, such as the refurbishment of homes that have been vacant for more than two years, or the installation of energy-saving equipment such as solar panels. Proponents argue that the resulting increase in the number of retrofit projects being undertaken would balance out the loss of government income per scheme. Others have gone further, calling for the rate to be lowered to zero. Although there was speculation that changes would be announced in  the 2021 budget, these failed to materialise.

There is a precedent for reducing retrofit VAT rates in the British Isles: in 2000, the Isle of Man was given temporary permission by the European Commission to reduce the VAT rate for property repairs to 5 per cent. After firms reported a boost in trade, this was extended and then made permanent. In 2009, the EU allowed all member states to reduce VAT on the renovation of private dwellings to 5 per cent.

Matt Moody is section editor of The Planner

Image credit | iStock | Grosvenor _ Grey-Hutton