Housing associations in Scotland face a potential £10 billion funding gap in efforts to decarbonise council homes, according to a new report by the Scottish Federation of Housing Associations (SFHA). The group warns that the costs of replacing gas boilers with clean heat sources like heat pumps have been 'vastly underestimated'.
The report claims that if the cost of retrofitting is passed onto housing associations, social tenants could see annual rent increases of £500 above inflation. A previous study by the Scottish Housing Regulator estimated the cost of decarbonising social housing by 2030 could reach £9.6 billion, while the Scottish Government's own modelling suggested around £6 billion.
The SFHA urges the government to provide 'long-term funding solutions' to ease the burden on housing associations and tenants. It highlights that from a £200 million net zero heating fund for social housing allocated since 2021, only £75 million has been awarded. The group also demands clarity on future energy-efficiency standards and safeguards against rent or bill hikes for tenants.
The report comes ahead of a statement from SNP ministers expected to water down key green homes legislation due to cost concerns. Acting Net Zero Secretary Gillian Martin has warned the Heat in Buildings Bill could not continue in its current form as it would 'make people poorer'. The Scottish Government has already abandoned a previous target of a 75% emissions cut by 2030, though the net zero by 2045 target remains.
Nearly a fifth of Scotland's carbon emissions come from domestic heating. The government estimates converting a home to clean heating costs around £14,000, but the SFHA cites a Shetland retrofit project where costs ranged from £33,000 to £38,000 for fabric and ventilation work alone. The SFHA stresses that the transition must not penalise tenants and should contribute to fuel poverty objectives.
