New report highlights investment models to support decarbonisation of Scotland’s social housing
A new Report (Summary Report – Financing and funding the decarbonisation of Scotland’s social housing) published today (11 March 2025) by infrastructure body, the Scottish Futures Trust (SFT), highlights a series of financial models to attract investment into retrofitting Scotland’s social housing stock.
Across Scotland there are over 625,000 social housing properties (approx.1 in 4 of all Scotland’s homes) which are owned by local authorities and Registered Social Landlords (RSLs).
To achieve Scotland’s net zero targets, many homes will need both the retrofit of clean heating technologies (such as heat pumps or connection to heat networks) and improvements to energy efficiency.
The investment needed to deliver this across the sector will be a significant challenge where support from the private sector is needed.
In seeking to provide RSLs and councils with cost-effective solutions to retrofit their properties, SFT has developed a series of investment models. The models can be used in a variety of ways depending on how landlords can access borrowing and also the number of properties they own.
Toby Tucker, associate director at the Scottish Futures Trust and who led on this Report, said: “Delivering energy efficient housing with clean heating systems will not only reduce carbon emissions, but can also deliver socio-economic benefits, where warmer, more comfortable homes can significantly improve health.
“In preparing this Report, we engaged with many stakeholders who identified a keen interest in strengthening and developing the current support that is available via the Social Housing Net Zero Heat Fund (SHNZHF).
“The enhanced support recommended in this Report aims to provide immediate support to all social landlords, and importantly provides an initial step for further working with the sector to catalyse the development of future financial models.
“Based on our analysis, the most likely model to succeed is the ‘aggregator approach’. This offers the opportunity to use public sector capital to lever in more private sector investment at a lower over-all cost of finance, and ultimately provides an enhanced ‘one stop shop’ support for both project development and financing of net zero installations.”
Other key recommendations from the Report include developing clarity on the social housing net zero requirements, developing a central resource where installation data and materials costs are gathered and shared, as well as information on the performance and net savings achieved for energy efficiency and clean heat deployment.
Providing social landlords with direct access to this data will be key to helping inform, develop, evaluate and deliver net zero retrofit projects going forward.
Sally Thomas, Chief Executive of the Scottish Federation of Housing Associations (SFHA), said: “Reducing carbon emissions and integrating clean sources of heat into our social homes is arguably the biggest challenge facing housing associations today, which is why this report makes for essential reading.
“SFHA fully supports the recommendation to strengthen the Social Housing Net Zero Heat Fund because our transition to net-zero must be fair, it must be just: tenants cannot foot the bill through higher rents, which would be the only way not-for-profit housing associations can fund it if additional money can’t be found.
“So our housing associations require funding solutions which allow them to significantly accelerate their retrofit projects at scale while not affecting rents and we look forward to discussing this and the rest of the report’s findings in our continued engagement with the Scottish Government.”
