The Government’s recent announcement of an additional £100m for the Social Housing Retrofit Fund is undoubtedly positive news for the sector. At a time when providers face intense regulatory pressure around damp, mould, energy efficiency and decarbonisation, together with yet another international energy price crisis, further capital to deliver energy efficiency upgrades should help accelerate the delivery of warmer, safer and more cost-efficient homes for tenants. 

Together with the advent of what is now a wide range of retrofit finance products from likes of Barclays and THFC (to name but a few) ‘retrofit’ as a concept has significant traction in the social housing sector and the role it plays in the business plans and strategies of social housing providers (particularly as we move towards the New Decent Homes Standard) is only going to grow.

Whilst all of that is positive, the challenge (as voiced by many in the social housing sector) is ensuring that retrofit (and its growing share of capital investment) does not undermine, detract or distract from investment in new development itself.  

Credit‑enhanced structures, guarantees and performance‑led funding have made retrofit more attractive, whereas new developments are still grappling with planning delays, cost inflation and covenant pressure. The risk, it would seem, is that, if left unchecked, the quality of existing stock will continue to increase but the net new social supply of social/affordable homes will continue to fall further behind - an imbalance looms.

Is it all doom and gloom for new development investment? 

We continue to see a wide range of funding transactions in the social housing sector involving an increasing array of funders offering an increasingly varied set of products. Whilst retrofit features heavily an appetite remains from funders to support new development and (where possible) we are seeing our clients availing themselves of funding products that will support with those new development objectives.

One exciting development that may help to address the ‘balance’ of capital investment is the much-lauded National Housing Bank. The Government’s announcement of the National Housing Bank (NHB) in June 2025 has been supported by a steady stream of headline-grabbing announcements thereafter, which have only gathered pace since its formal launch on 1 April 2026!  A little earlier this week we heard that the long-awaited NHB loans - to be offered on an unsecured basis, at 25-year terms and with below market rates of as low as 0.1% per annum - will be available in the Autumn, with details on eligibility, pricing and route to access to be published closer to the time!

These loans (from a pot of £1billion for outside London and from a pot of £1.5billion within) will (as we understand it) be directed to social housing providers with ‘shovel ready’ schemes and with a core aim of achieving that all-important ‘additionality’ to the UK’s housing stock. 

Used well, this capital has the potential to complement retrofit investment, rather than compete with it - and could play a crucial role in achieving the ‘balance’ referred to above.

Watch this space! 

Retrofit and development are not competing priorities; both are essential if the social housing sector is to meet regulatory standards, decarbonise existing homes and deliver the social and affordable housing that the country urgently needs.

The detail of how the NHB loans are structured and accessed will be pivotal in shaping the next phase of social housing delivery and may well prove the deciding factor in achieving that balance between retrofit and new development priorities.  As ever, let’s watch this space.

For more information, please contact me.