Britain’s housing stock is ill-equipped for the effects of a warming world, meaning the work to futureproof the built environment through retrofit must begin today, writes Annisa Sekaringtias, programme manager at the Cambridge Institute for Sustainability Leadership
The UK’s construction sector stands at a pivotal moment. Spring 2025 was the warmest and one of the driest on record in England.
As hotter summers become more likely and one in four homes at flood risk by 2050, the urgency to futureproof our built environment is no longer theoretical; it is a design and delivery challenge for today.
The recent £13.2bn boost to the Warm House Plan, announced in the 2025 Spending Review, signals the government’s commitment to improving the energy performance of UK homes.
While this funding is a welcome step, it needs to be seen as the foundation for a broader, integrated retrofit strategy – one that addresses not only energy use but also climate resilience, health and financial stability.
Meeting this challenge requires a shift from fragmented upgrades to a long-term, joined-up strategy. For the construction industry, this is a critical opportunity to lead the transition.
Housing stock under pressure
Britain’s homes are among the oldest and least energy-efficient in Europe. Many are ill-equipped to handle the extremes of a changing climate: cold, damp winters, scorching summer heatwaves and increasingly frequent floods.
Between 2023 and 2024, more than 7,000 homes in England were flooded during the wettest 18-month period on record. Increasingly frequent storms like Babet and Ciaran triggered £585m in insurance payouts, but the real cost – disrupted lives, lost possessions and long-term displacement – goes far beyond the numbers.
With most of the homes that will exist in 2050 already built, retrofit is essential to climate-proofing the UK. And the risks are mounting. Insurance premiums have already risen by 16% in less than one year.
In countries like the US and Australia, entire neighbourhoods are becoming uninsurable.
In the UK, the FloodRe reinsurance scheme currently protects some homes from unaffordable premiums – but it is set to end in 2039, and new homes are still being built on flood plains.
Integrated retrofit: A strategic investment
Retrofit is often seen as a green upgrade: better efficiency, lower energy bills. But in today’s climate, it is much more than that. As outlined in our report the Business Case for Integrated Retrofit, it is a strategic investment in public health, economic resilience, and financial stability.
Beyond energy efficiency, integrated retrofit should address health, well-being, and resilience, by looking at issues such as overheating, floods, and indoor air quality. These improvements can reduce hospital admissions, enhance productivity, lower household costs and generate savings for public services.
For the financial sector, they protect asset quality and insurability. It has been found that every £1 spent on flood-proofing a home can save £5 in avoided damages.
Finance has a role to play
Banks face rising climate risks across their mortgage portfolios. Poor energy performance and low resilience properties are more likely to devalue and default. To mitigate this, banks need to embed retrofit into lending by rewarding improvements through risk-adjusted pricing and integrating retrofit finance into home purchases. By capitalising on the socioeconomic and resilience benefits of retrofit, banks can reduce arrears, stabilise collateral values and unlock new sustainable finance markets.
As with lenders, insurers face growing pressures through increasing claims from climate-related damages. To protect long-term insurability, insurers need to evolve underwriting models to recognise adaptation measures, develop resilience-focused products and embed retrofit into claims handling. As major clients of the repair and construction industry, insurers can also advocate raising standards and expand market capacity by investing in skills and service networks.
But this transition must be inclusive. Without thoughtful design, we risk trapping vulnerable homeowners in low-value, high-risk properties that cannot attract affordable finance.
Government must lead the way
Government leadership is essential to provide regulatory certainty and an enabling environment. A joined-up, long-term national retrofit strategy needs to recognise retrofit as a lever for growth, financial stability and reduced inequality.
Strategic actions include reforming the Energy Performance Certificate (EPC) regime, harmonising Building Regulations, supporting households by making electricity cheaper and ensuring that public funds reach those that need them most, and crowding in private investment through blended finance. Public education campaigns and support for local authorities will be critical to scaling delivery and ensuring a just transition.
Local authorities and housing associations are key delivery partners. Their ability to aggregate demand, coordinate supply chains and engage communities makes them vital to scaling retrofit in a just and inclusive way.
A national asset in a warming world
Housing improvements today reduce fuel poverty, prevent future financial distress and lessen the burden on public systems. To unlock this potential, the construction sector, financial institutions and government need to collaborate to build a shared industry-wide knowledge base, supported by common standards, shared data and aligned incentives.
Retrofit is no longer a niche agenda. It is central to ensuring that homes remain safe, insurable and affordable in a warming world.
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