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Why cheaper loans alone won’t fix Britain’s leaky homes

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Two people fitting tiles on a wall in an attic

Government retrofit policy has long rested on a simple assumption: if you could find the right product at the right price – a green mortgage, a low-interest loan – homeowners will come forward in their millions to insulate their homes and cut their energy bills. It hasn’t happened. Retrofit take-up remains stubbornly low, even as the grants on offer have kept coming, such as the UK Government’s 2026 Warm Homes Plan.

Professor Mark Davis, in the School of Sociology and Social Policy, along with Professor Lucie Middlemiss and Dr Anne Owen in the School of Earth, Environment and Sustainability, was part of a consortium with Strathclyde and Sussex Universities that used funding from the UK Energy Research Centre (UKERC) to test a different hypothesis: that finance was never really the barrier at all.

Impact

  • Knowledge discovery: found that the appeal of cost savings and climate benefits does little to motivate retrofit take-up, and that starting instead from residents’ own priorities and life circumstances opens up conversations that a finance offer alone cannot. 
  • Policy impact: attracted direct engagement from national government’s retrofit policy team and from Lloyds Banking Group/National Wealth Fund, and led to the creation of the Retrofit Policy Lab, a test-and-learn partnership now working with three Yorkshire combined authorities. 

Key information

  • Major funders: UK Energy Research Centre (UKERC); ESRC Impact Acceleration Account (IAA) 
  • Partners and collaborators: Lighthouse Policy Design; West Yorkshire Combined Authority; South Yorkshire Mayoral Combined Authority; York and North Yorkshire Combined Authority; Department for Energy Security and Net Zero (DESNZ) retrofit team; Lloyds Banking Group/National Wealth Fund 
  • Disciplines: economic sociology, energy policy, public finance 
  • Investigators: Professor Mark Davis, Professor Lucie Middlemiss, Dr Anne Owen.

Starting with people, not policy

Retrofit is usually framed, in policy terms, as a “fabric first” problem: insulate the walls, install solar and battery storage, maybe a heat pump, move the radiators, redo the pipework, and the energy savings follow. What that framing misses is the sheer disruption involved, and the fact that a homeowner taking out a low-interest retrofit loan is left almost entirely on their own to manage the project – working out which technology they need, which tradespeople to trust, and how to handle the inevitable complications, with very little support along the way.

Construction worker in a high vis jacket and helmet putting insulation on the inside of a roof

The project, called Whole Person, Whole Place, deliberately started from the opposite direction: not the property, the policy or the finance model, but the people who would actually have to go through the process. Fieldwork ran across three very different housing contexts: multiple-occupancy homes in Glasgow, owner-occupiers in Leeds, and private rented housing in Brighton. 

The findings were consistent across all three: appeals to climate benefit or cost saving made little difference to people’s willingness to act. What did make a difference was connecting retrofit to things people already wanted for their home – a new kitchen, a loft conversion, more space for a growing family or an elderly relative moving in.

Meeting people in the context of their actual lives and aspirations, rather than trying to sell them an abstract climate or finance proposition, was what opened a genuine conversation about change. 

The relational work retrofit demands

The team describes this as a “relational approach,” drawing on insights from economic sociology to recognise the emotional and practical labour homeowners take on once they agree to retrofit – negotiating within the household, working out which funding route is appropriate, and navigating cultural or religious considerations that standard finance products don’t account for.

Owner-occupiers of older terraced housing along the M62 corridor, often South Asian families living in those buildings most in need of retrofitting, frequently won’t take out loans at all on grounds of Islamic finance principles – making a low-interest loan offer effectively irrelevant to them, however competitive its rate. 

A large grey fan on the side of a house

This thinking led to a partnership with Lighthouse Policy Design to create the Retrofit Policy Lab, a test-and-learn space for policy, finance and delivery teams. Using generative AI, the team built 12 data-informed personas representing typical people affected by retrofit policy, from landlords with multiple properties to single parents and retirees, capable of giving realistic, conversational responses to proposed policy ideas. 

When DESNZ’s retrofit team tested a suite of policy ideas at a recent workshop in York using these personas, few of their ideas worked. The persona representing single parents, for example, made clear that no message about energy efficiency would land without solving a much more immediate problem: childcare.

That insight led directly to a proposed solution – community evening groups for children, run by councils or local organisations, creating a space where parents could be introduced to simple, low-level energy efficiency measures such as induction hobs or thermal blankets, without competing for their attention against a more pressing need. 

Building the evidence for what comes next

The team’s main delivery partnerships have been with the three Yorkshire combined authorities – West Yorkshire, South Yorkshire and York and North Yorkshire – building on insights from Home Energy West Yorkshire (HEWY), South Yorkshire’s Let Zero project, a retrofit offer for private-rented landlords in Sheffield that has proved particularly successful, and YorEnergy.

With the original UKERC funding ending in 2021, the team has secured funds from Research England, MCS Foundation and the Aurora Trust to sustain momentum and is now seeking further funding to run deeper test-and-learn work with different resident segments, mapping what a realistic “customer journey” looks like by tenure type, demographic and life stage. This will involve geospatial mapping – identifying, by postcode, where people matching each persona actually live, so combined authorities can target retrofit offers more precisely. 

Compared with Davis’s Local Climate Bonds work, which has already been launched, scaled and adopted nationally, this project is still in its earlier stages — building the evidence base and policy relationships needed before a comparable retrofit model can be tested at scale.

But the direction of travel is the same: recognising that the biggest barrier to retrofit isn’t the finance on offer, but whether the offer speaks to the life someone is actually trying to live and can improve the places they care about most.

This project was sponsored by the UKRI Impact Acceleration Account.