- Domna’s contractor cost-benchmarking analysis finds social landlords paying 93% above market for low-energy lighting, 87% above for thermostatic radiator controls, 79% above for internal wall insulation and 78% above for cavity wall insulation under existing framework contracts
- Report calls for framework reform – a smaller number of meaningful, mandatory, government-run procurement frameworks, properly resourced procurement teams at Local and Combined Authorities, and scoring that rewards delivered results rather than paperwork compliance
- Case study shows a £2.8 million retrofit programme cut to £1.9 million once individual properties were assessed rather than scoped top-down, a saving of roughly a third
- A shift to open-book contracting and property-level target costs could release around £2 billion a year across the sector – equivalent to £20 billion over a decade – without new government money
Social landlords in England are paying substantially above market rate on the energy efficiency measures most in demand under the £15 billion Warm Homes Plan, according to new research from retrofit principal contractor Domna that calls for wholesale reform of how the sector procures and contracts with its supply chain.
The research finds that opaque framework contracts, grant-cap-driven specifications and a lack of whole-market cost visibility are costing the sector around £2 billion a year – roughly a fifth of the £10 billion housing associations now spend annually on repairs and maintenance of existing homes, according to the Regulator of Social Housing’s 2025 Global Accounts. Scaled across the decade, the figure stands at £20 billion.
The findings are set out in Closing The Social Housing Retrofit Gap: How Housing Associations Can Unlock Value, Cut Costs And Attract Investment, drawing on Domna’s own anonymised client and contractor cost-benchmarking database.
A crowded framework market that no longer disciplines price
Most retrofit and facilities management contracts in the social housing sector are let through closed, five-year frameworks with agreed unit prices and a separate schedule for variations. Once a contractor is appointed, the association has little room left to negotiate on price. The one place price still moves after that point is on variations and call-outs – exactly where contractors tend to recover their margin.
The report argues that housing associations can now choose from a crowded market of procurement frameworks, offered by a mix of commercial, not-for-profit and public sector providers. Many commercial framework providers generate revenue through supplier fees or commissions when frameworks are used. Combined Authority frameworks have the right ambitions but are often delayed, and using them is optional. With so many to choose from, housing associations can shop around until they find a framework that gives them the answer they want.
The criteria contractors are judged on within frameworks tend to reward having the right paperwork, rather than evidence of what they have actually delivered. The report calls for three changes:
- A smaller number of meaningful, mandatory, government-run frameworks to replace the current fragmented market.
- Properly funded procurement roles at Local and Combined Authorities, so the people doing the buying have the time and expertise to do it well.
- Scoring that rewards results, with completed projects assessed and the findings fed back into who wins work next time.
Where the money is going
Domna’s benchmarking database compares contracted unit prices paid by an anonymised housing association client against market averages for the same work. The gap on a number of common measures is substantial.
- Low-energy lighting: 93% above market average
- Thermostatic radiator valves with roomstat programmers: 87% above
- Internal wall insulation: 79% above
- Cavity wall insulation: 78% above
- Loft insulation: 69% above
- Mechanical ventilation: 58% above
- Double glazing: 55% above
- Solar PV: 52% above
Other measures came in close to or below market rate, including boiler upgrades at 3% above average, air source heat pumps at 2% above and flat roof insulation at 24% below.
The report argues this drift occurs because, once a contractor is placed on a framework and nobody routinely checks their prices against the wider market, pricing tends to rise rather than reflect what the work actually costs. Most associations commissioning a benchmarking exercise for the first time find at least one line item where the mark-up is striking.
The case for open-book contracting
The alternative is open-book contracting, standard practice in other construction sectors and other countries. Under an open-book contract, the contractor shows its actual costs and its margin rather than quoting a single opaque price. The two sides agree a “target cost” for the work up front, and actual spend is reconciled against it, so a variation becomes a negotiation against an agreed baseline.
The report cites a worked example from Domna’s own client base. A housing association’s retrofit project was estimated top-down at £21,000 per home, at £2.8 million in total. Costed home by home, the same project came in at a median of £14,000 per home and £1.9 million in total – roughly a third less.
On Domna’s analysis of housing association stock, retrofit costs per home range from around £1,200 at the cheapest quarter of homes to more than £91,500 for the highest-cost 1%, with a typical home costing around £5,400. On that evidence, a meaningful share of stock could reach EPC C for a few thousand pounds through simple measures such as loft insulation top-ups, LED lighting or thermostatic radiator valves, well below the full retrofit grant cap.
Grant caps are shaping specifications
Under the current Warm Homes: Social Housing Fund, the standard capital grant is capped at £7,500 per home, rising to £15,000 for eligible off-gas low carbon heating and £20,000 for eligible on-gas low carbon heating. Once a cap exists, the report argues, a contractor’s incentive is to scope every home up to it, whether the work is needed or not. The government funds around half of a typical retrofit programme, and the association funds the rest – so if a job runs over budget, the extra cost falls entirely on the association.
The report recommends housing associations sort their stock into three categories before applying for grant, and let the category decide the funding route rather than the other way round: minor energy efficiency upgrades funded through the in-house minor-works budget; targeted retrofit of more involved measures; and strategic investment decisions for homes needing significant work, funded through the major retrofit grant.
Delivery pressure builds
The research comes at a point of acute pressure on the construction and retrofit supply chain. The Energy Company Obligation, worth £1.7 billion a year, ended in March 2026, with an estimated 222,000 planned retrofit projects and 10,000 supply chain jobs affected. Meanwhile, Awaab’s Law Phase 2 extends on 30 November 2026 to cover excess cold and heat, falls, fire and electrical hazards. Every social rented home must reach EPC C against one reformed EPC measure by April 2030 and a second by April 2039.
The G15 group of London housing associations estimates that reaching EPC C costs around £6,000 to £8,000 for a typical social home, rising to £25,000 to £35,000 for the roughly 20% of social stock considered “hard to treat”, and up to £60,000 where external or internal wall insulation is required. For the sector as a whole, the National Housing Federation puts the cost of decarbonising existing housing association homes at at least £36 billion, with a further £11.3 billion needed to meet the revised Decent Homes Standards. Only £1.29 billion is ringfenced for social housing retrofit through the Warm Homes: Social Housing Fund over 2025 to 2028.
Private capital stepping in
The report also examines how private investment and alternative financing structures can help close the gap, setting out four blueprint case studies already being used by peers in the sector:
- Legal & General and Hyde Group – a 50/50 joint venture launched in March 2026, combining capital from L&G’s annuity portfolio with Hyde’s national housing platform, beginning with a portfolio of more than 1,000 social rented and shared ownership homes.
- Pension Insurance Corporation and Bromley Council – a £67 million long-term, inflation-linked financing deal agreed in 2021 to purchase up to 300 affordable properties, maturing in 2071.
- Clarion Housing, Sero and Tallarna – a solar financing pilot in Bromley using a special-purpose vehicle to raise private capital and own the equipment installed in homes, aiming to fund solar panels, batteries and renewable heating across at least 1,500 homes, with a guaranteed 10% reduction in residents’ energy bills backed by insurance from Tallarna.
- Sovereign Network Group and Lloyds Banking Group – a £100 million loan from Lloyds to Sovereign Network Group to fund retrofit of thousands of social homes across the South, West and East of England including London, the largest single loan Lloyds has made under this programme to date. The lending sits within a wider £500 million commitment underwritten in part by the National Wealth Fund.
Industry voices
Anna Moore, chief executive of Domna, said:
“Housing associations are already paying for much of what needs to be done. Our research suggests there is around £2 billion a year of that spending that could be put to better use, including substantial price gaps for the same work, programmes scoped up to a grant cap rather than to what the home actually needs, and retrofit and repair teams working past each other.
“Every pound lost to duplicated work or uncompetitive contractor pricing is money that cannot be invested in making another home warmer, safer or cheaper to run. Getting the basics right on buying and planning could extend programmes to thousands more homes without waiting for another government spending commitment.”
Dan Germann, managing director of Durkan Regen, said in a contribution to the report:
“Open conversations about scope, design, costs and programme risks should start early. The aim should be to agree what each home actually needs, what a sensible target cost looks like and how variations will be handled if conditions change.”
Neal Ackcral, chief operating officer, Hyde Group, said in a contribution to the report:
“Getting energy-efficiency works right requires more than skilled installers. We need surveyors who understand what each home needs, contract managers who can challenge specifications and colleagues who can explain the process and manage delivery. Work that is poorly scoped or carried out incorrectly can waste money and sometimes create further problems.
“Improving existing homes is as much about how housing associations organise themselves and their supply chains, as about the level of funding available.”
Andy Hulme, group chief executive of Hyde Group, said in a contribution to the report:
“We cannot afford to treat improving existing homes and building new ones as competing ambitions. Housing providers have an obligation to make the homes we already manage safe, warm and fit for the future.”
Paul Hackett CBE, chief executive of Southern Housing, said in a contribution to the report:
“Costs have risen, regulatory obligations have increased and borrowing capacity is under pressure. Particularly in London and the South East, the need for new affordable housing is greatest in some of the places where associations have the least financial room to manoeuvre.”