Scottish Government plans to decarbonise Scotland’s social housing stock could force landlords to hike rents by 80%, according to a grim new report.
The Scottish Housing Regulator estimates that the cost to Registered Social Landlords (RSLs) of implementing new SNP-Green proposals could be as much as £9.3bn.
The Scottish Federation of Housing Associations (SFHA) has now urged ministers to come forward with “adequate funding” for the sector’s transition.
Last November, the Scottish Government launched a consultation on proposals for a new Social Housing Net Zero Standard (SHNZS) which would see RSLs compelled to make sure all their existing housing and flats meet a basic level of energy efficiency.
Crucially, it would see them required to replace fossil fuel gas and electric heating systems with clean heat alternatives by 2045.
The regulator says the work needed will require “significant and costly future investment” particularly on older buildings.
For those homes constructed before 1919, meeting the existing requirement – the Energy Efficiency Standard for Social Housing (EESSH2) – is expected to cost the sector around £13,300 per house, a total of £370m.
However, the cost of meeting the new standard, particularly the move away from fossil fuel-based heating, will be substantially more.
The report points to work carried out by Southside Housing Association on raising energy efficiency standards in eight sandstone tenement flats three years ago to the the equivalent of the new standard.
The work cost the Glasgow landlord the equivalent of £42,635 per flat.
For post-1919 buildings, they estimate that the cost of meeting the SHNZS could be £27,943 for a flat and up to £42,635 for a 3-bed semi-detached house.
With 315,000 social housing association properties in Scotland, the regulator says the cost could range from £4.6bn to £9.3bn.
The report warns: “These figures bear no resemblance to the current aggregate level of costs included of £129m and to fund these higher estimates entirely from rents would require annual increases of between 42% and 80%.
“Alternatively, to fund solely through additional borrowing could see interest charges upwards of £1.3bn being added in the period to 2030.”
Carolyn Lochhead the Director of External Affairs at the Scottish Federation of Housing Associations told The Herald: “Our social homes are already some of the most energy-efficient in Scotland and as a sector we are fully committed to tackling the climate emergency and meeting our net-zero targets.
“We should not shy away from the fact that the costs associated with ensuring existing social homes meet net-zero standards are considerable, and that they simply cannot be met from rents as we must keep them affordable.
“We would therefore urge the Scottish Government to ensure that this transition is fair, with adequate funding made available.”
Sean Clerkin, from the Scottish Tenants’ Organisation, said: “The five-year financial projection is a perfect storm for social renting tenants in Scotland.”
He added that any rent increase would be opposed by tenants in Scotland. He called for the Scottish Government to inject billions of pounds into building tens of thousands of new homes and retrofitting empty homes.
The Scottish Government said the consultation on the SHNZS acknowledged that significant investment in social housing would be needed to meet the 2045 target for net zero heat in buildings.
They said their Social Housing Net Zero Heat Fund made at least £200 million available to social landlords until 2026 for the retrofit of existing housing stock.
They also said they were investigating ways to encourage more private finance to support the transition in the social housing and other building sectors.
