Unpacking the Government's New Warm Homes Plan

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the collective position or official stance of the Croydon Community

Energy (CCE).Last month, on the 21st of January 2026, the Government launched its Warm Homes Plan (WHP) across the country, a flagship policy to tackle high energy bills and fuel poverty. Described by some as the largest public investment in home upgrades in British history, the WHP plan aims to ensure that low and middle‑income households, as well as those in the private and social rented sectors, can access the benefits of low‑carbon technologies. Technologies such as home batteries, heat batteries, and storage heaters, which can be charged either when a property is generating energy or when grid electricity is cheaper, consequently allowing households to avoid peak energy prices.

Furthermore, the Government’s capital investment intends to deliver home upgrades to fuel poor households. This will focus on installing rooftop solar as well as insulation, clean heat and home batteries, funding skilled local jobs across the country.

Read our previous blog on fuel poverty here.

Low Interest Loans and Allocations

The government’s vision for low-interest and zero-interest consumer loans, is to offer a range of low-cost finance solutions available for homeowners. The scheme could be used to fund the installation of a single technology, or a ‘package’ of different measures. The rollout of tailored home upgrade packages for low-income households will include solar panel upgrades, batteries, (suitable) insulation and clean heating - potentially saving households hundreds of pounds a year on their energy bills. The documentation states, “An owner-occupier three-bedroom mid-terraced home which gets solar panels and a battery could save £450 on their annual energy bill through the Consumer Loans.”

The WHP sets out to enable upgrades for all homes, regardless of circumstance.

An allocation of funding (£ millions) is pictured below.

Through working with the finance industry, the Government will develop a range of products suitable for different consumers and different technologies. For example, some people may wish to increase their mortgage to cover the costs, whilst others may wish to take out a separate loan. All products will be supported by government funding to significantly lower the cost of the loans for consumers in the first place.

This is a “universal offer” for all households, regardless of income. These loans are intended to increase access to home energy improvements, they may be used to cover costly up‑front capital costs. The loans will be accessible through mainstream lenders (backed by government support) and will complement existing schemes such as the Boiler Upgrade Scheme (BUS).

These schemes are currently being phased in, but there is still a significant delay between their announcement and the publication of detailed guidance. A recurring criticism of the plan is the lack of clarity around key elements such as timelines, eligibility criteria, costings, and overall scheme design.

The Age of Fabric First

Previous government policies have tended to emphasise upgrading a building’s thermal performance before installing new heating systems. This new approach expands upon the over a decade old ‘fabric-first’ debate.

Importantly, the Warm Homes Plan sits within the expectations of PAS 2035, the British standard for the domestic retrofit and energy efficiency sector. All projects funded by the WHP must meet the PAS 2035 standard.

Improving insulation, airtightness and ventilation remain fundamental to preventing damp, mould and excessive energy usage. Without substantial material improvements, technology upgrades can underperform or even exacerbate existing issues. In this regard, the WHP’s focus on technology should be understood as complementary to high‑quality retrofit interventions, not a replacement for them.

The balance between material improvements and low‑carbon technologies remains a point of significant debate across the retrofit sector. Advocates of rapid electrification emphasise the need for urgent decarbonisation. Whilst proponents of a material upgrade approach highlight benefits of indoor air quality, reduced overheating risk and long‑term resilience, alongside lowering energy bills. Many commentators warn that leaning too heavily into flashy new technologies could risk slowing the retrofit industry, locking households into higher long‑term costs with greater maintenance burdens, and potential unhealthy indoor conditions.

The current consensus is that whole‑house, material‑sensitive retrofit is essential to protect health, safety and performance.

Therefore, the WHP will need to ensure its delivery partners do not replicate the failures seen in past retrofit schemes that rush installation without holistic design. Modern technology alone cannot reduce energy costs, unless paired sound building construction.

For further insight into this debate, I highly recommend Guy Martin’s recent Channel 4 documentary House Without Bills. Presented by the former British superbike racer and engineering enthusiast, the documentary piece questions how far technological innovation can take us and where high‑quality fabric improvements remain essential. His deep‑dive into the material and engineering advancements of recent years is well worth a watch for anyone interested in the practical realities behind low‑carbon, low‑cost living. Available on Channel 4.

Who Is Considered Low‑Income?

Now, it’s worth elaborating on the welcomed emphasis to “low income”. In Croydon a study from Trust for London and WPI Economics found that in 2021/22, 26% of people in the borough lived in households with an income of less than 60% of the UK average (after housing costs have been subtracted). Additionally, 16.6% of residents were estimated to be earning below the Living Wage.

Low‑income support will first be channelled through the government’s Warm Homes: Social Housing Fund (WH:SHF) and Warm Homes: Local Grant (WH:LG). In practice, this covers households in homes rated Band-D or below for energy efficiency, as well as those whose heating costs push their remaining income beneath the official poverty line.

The grant is intended for homes that are privately rented or owned by low-income residents, especially those with low EPC ratings. From 2027/28 onwards, the Government intends to integrate the WH:SHF and the WH:LG into a single low‑income capital scheme which will shift toward area-based delivery. However, once again there is no timeframe outlined for this. A planned low‑income households eligibility consultation is to be held later in the year.

Deliverance From Local Authorities

The Warm Homes Local Grant is to be local-authority-led. Whereby funding is allocated to eligible local authorities, who can identify qualifying houses, procure installers and oversee retrofit delivery. The worry is that devolving too much authority to mayoral offices may introduce inconsistency, delays, or uneven delivery across regions.

For many Croydon residents, the risk of poorly managed local authority enterprises is not an abstract concern but a lived memory. The infamous, council‑owned, developer Brick by Brick launched with the promise of unlocking affordable housing delivery. Instead, the failed organisation became a symbol of systemic governance failure. Recording substantial losses, failure to deliver expected returns forced Croydon Council to write off £68 million in unrepaid loans. Subsequently culminating to the wider financial crisis that led to the councils’ first Section 114, declaring their first bankruptcy in 2020.

The episode remains a cautionary tale of how optimistic narratives can mask deeper structural weaknesses. While local leadership can unlock local insights, relying heavily on mayoral involvement risks creating a postcode lottery in how the Warm Homes Plan is implemented.

The Future of Community Energy

Finally, from a community energy perspective, the Warm Homes Plan investment aims to support local energy cooperatives and community-led home upgrade schemes. Enabling groups of households to share infrastructure, such as solar arrays or battery storage, will see collective benefit from lower costs and improved resilience.

Community Energy England’s Chief Executive, Emma Bridge, expressed support for the Warm Homes Plan. She notes that £15 billion investment will help millions of households improve their energy efficiency and transition away from fossil fuels. She highlighted that the plan focuses on those who have previously been unable to afford upgrades, strengthening support for social housing and brings new protections for renters and landlords.

The WHP outlines a model in which the capital costs of projects are covered through monthly subscription fees, set lower than previous energy bills. Building on this approach, the Greater Manchester Combined Authority (GMCA) is developing a revised offer through its Net Zero Housing Retrofit Framework, working with solar PV installers to make installations more affordable. The measures under development include neighbourhood‑level, group‑buying discounts of up to 15%, referral incentives and reduced prices for multi‑technology packages.

The focus on low-carbon technologies, community partnerships and long-term affordability, signals a meaningful shift in the UKs approach to domestic energy. It is expected that local energy groups, councils and residents must collaborate to ensure successful delivery. The WHP may mark the beginning of a greener, fairer, and more resilient energy future. Alas the proof is in the pudding, and now we wait for further details as this ambitious plan unfolds.

Thanks to CCE member Reece Richards for writing this blog. If you'd like to submit a blog post, please email us at hello@croydoncommunityenergy.co.uk