At WPF, we are proud of our affordable housing portfolio's social and environmental credentials. In our latest Impact Report, we shared the statistic that 67% of the homes in our portfolio have an EPC rating of B or above. Energy Performance Certificates (EPCs) tell you how energy efficient a building is and give it a rating from A (very efficient) to G (inefficient). They provide an indication of how much it is likely to cost to heat and light, and what its carbon dioxide emissions are likely to be.
As a Fund, we have set a target of net zero by 2050 for all our investment portfolios, but why does this matter for affordable housing? Simply put, the world is changing, and our investments need to be ready to keep up, or we will lose out financially.
Modern methods of construction are more efficient, as well as being environmentally beneficial. And developments which are sensitive to the climate are also more desirable for residents - for example an energy efficient home is less costly to run, and homes which have access to amenities such as EV charging are likely to be more attractive, a fact which in turn boosts the returns we earn as investors.
In other words, homes with better environmental credentials are better homes for people to live in, delivering a positive social impact.
Case study - an ambitious retrofit project at Mildenhall
One of our affordable housing managers, CBRE (WPF commitment of £40m), have been working with housing manager Waypoint on a retrofit programme at their development in Mildenhall. The retrofit programme aims to bring all 100 homes from an EPC D to a B, with works including the conversion of oil boilers to air source heat pumps and the installation of solar PV panels.
This work is necessary - with a current EPC rating of D, these homes were set to fail against upcoming regulatory requirements, which state that all new tenancies need to have an EPC rating of at least C by 2025 (and all existing tenancies by 2028). The existing heating system in these properties was close to the end of its economic life, and therefore replacing with like-for-like was not a practical solution.
This work began by piloting the programme in four homes, costing £30,000 per home. With utility savings of c.20% and a carbon saving of c.72%, CBRE's ESG team has estimated that the works conducted have the potential to save residents 36% on their heating bills. This represents a significant saving at a time when there are significant cost pressures on residents, particularly regarding energy bills.
Photo:A house at the Mildenhall development, kitted out with solar panels.
Following the success of the pilot, CBRE will now be rolling out the programme to the remaining 96 units in the development, at a total cost of £3.3m. Due to carrying out the work in bulk, CBRE estimate that the installation time can be reduced from one week to two days, meaning residents can remain in their homes during the works, thereby minimising disruption. At the time of writing, 80 homes have now been successfully retrofitted!
We were keen to understand more about the impact on the residents, and were pleased to learn that the consensus on the site is that the air source heat pumps are proving effective, and since CBRE have started helping the tenants review and, in most cases, change their utility suppliers, they are expecting to see some significant savings on their energy bills.
In addition to the positive impacts for the residents, there are economic benefits for us as investors from this retrofit project as well. The £30k investment in each house helps preserve value and ensures the investment meets future regulations and as such continues to be income generating into the future.
Conclusion
In conclusion, the journey toward energy-efficient, affordable housing is not just an investment in bricks and mortar; it's an investment in a sustainable future. The Mildenhall retrofit project exemplifies how combining environmental stewardship with economic foresight can create living spaces that are not only more cost-effective and desirable for residents but also more profitable and resilient for investors.
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